In the relationship between steel producers and shipbuilders, vertical integration is highly unlikely because
A)There are low transaction costs and low switching costs associated with purchasing steel, and plenty of suppliers
B)There are insufficient technical economies from combining steel production and shipbuilding
C)Both industries aren't very profitable, so neither firm is likely to be able to afford to buy the other
D)Both a and b above

Question

Quizplus · Accepted Answer

Vertical integration is unlikely because there are low transaction and switching costs with many suppliers (A), and there are insufficient technical economies from combining the two industries (B).

In the Relationship Between Steel Producers and Shipbuilders, Vertical Integration