The bargaining power of buyers may lead to forward vertical integration.

Question

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When buyers have a strong bargaining power, they are more likely to demand lower prices and better terms from the supplier. In order to reduce their vulnerability to the bargaining power of buyers, suppliers may choose to integrate forward into the buyer's market. This allows the supplier to capture more of the value chain and reduce dependence on the buyer.

The Bargaining Power of Buyers May Lead to Forward Vertical