Vertical integration allows the firm to gain market power as the firm develops the ability to save on its operations, avoid market costs, improve product quality, and possibly protect its technology from rivals.

Question

Quizplus · Accepted Answer

This statement is true. Vertical integration refers to the strategy where a firm expands its business operations into different stages of the production process, from production to distribution. By doing so, the firm can save on its operations, avoid market costs, improve product quality, and protect its technology from rivals. As a result, the firm gains market power, which allows it to charge higher prices, increase its market share, and gain a competitive advantage over its rivals.

Vertical Integration Allows the Firm to Gain Market Power as the Firm