Vertical integration is attractive when
A) administrative costs are higher than transaction costs.
B) transaction costs are higher than administrative costs.
C) transaction costs and administrative costs are equal.
D) search costs are higher than monitoring costs.

Question

Quizplus · Accepted Answer

If transaction costs are higher than administrative costs, that is, those costs incurred when coordinating the activities elsewhere in the value chain, vertical integration becomes an attractive strategy.

Vertical Integration Is Attractive When