Vertical integration can reduce transaction costs through all of the following ways except which one?
A)establishing a partnership between the two firms
B)decreasing the incentive for litigation
C)increasing information and control
D)creating managerial diseconomies

Question

Quizplus · Accepted Answer

Vertical integration involves merging or acquiring different stages of the production process under one entity, which can lead to managerial diseconomies such as increased bureaucracy and reduced flexibility. However, vertical integration can reduce transaction costs by establishing a partnership, decreasing the incentive for litigation, and increasing information and control.

Vertical Integration Can Reduce Transaction Costs Through All of the Following