The reason that the producers of wood pulp have often forward integrated into the production of paper is:
A)To increase value added by moving closer to the final customer.
B)To exploit technical economies of co-locating pulp and paper making plants while avoiding transaction costs caused by transaction-specific investments.
C)To be able to respond quicker to demand fluctuations because of superior coordination.
D)To insulate the firm from fluctuations in the price of wood pulp.

Question

Quizplus · Accepted Answer

Forward integration allows producers to exploit technical economies by co-locating pulp and paper plants, reducing transaction costs associated with transaction-specific investments.

The Reason That the Producers of Wood Pulp Have Often