Cost is moderate due to competitive check. Low ex post search cost. Low cost of drafting employment contract, and adapting uncertainty. High cost of administrating, monitoring, processing information, training employees. High cost of shirking and political efforts.
Competitive check is weakened.
It takes time to discover inefficiency. E. g. the day of bankruptcy. Same as firm. Very high cost of shirking and political efforts because the competitive check is very slow. E. g. it took 70 years to find out that socialism was uneconomical.