Vertical integration for firms is:
A)The ideal
B)A way to create a monopoly
C)A tried and tested recipe for success
D)Primarily to do with transaction costs

Question

Quizplus · Accepted Answer

Vertical integration is primarily to do with transaction costs. Vertical integration is a strategy that involves a firm acquiring its supplier or distributor to create a more streamlined supply chain. This reduces transaction costs as the firm does not have to negotiate with multiple suppliers or distributors. This strategy can help a firm achieve cost savings and improve efficiency. However, it is not the ideal or a way to create a monopoly. While it has been a successful strategy for some firms, it may not work for all businesses.

Vertical Integration for Firms Is