Vertical contracts can also be seen as
A)An increase in coordination between firms producing complementary goods
B)An increase in competition among firms producing complementary goods
C)An increase in coordination between firms producing substitute goods
D)An increase in competition between firms producing substitute goods

Question

​Vertical contracts can also be seen as
A)​An increase in coordination between firms producing complementary goods
B)An increase in competition among firms producing complementary goods
C)An increase in coordination between firms producing substitute goods
D)​An increase in competition between firms producing substitute goods

Quizplus · Accepted Answer

Vertical contracts involve coordination between firms at different stages of the supply chain, such as between a manufacturer and a distributor or between a franchisor and franchisee. These contracts aim to improve coordination and reduce transaction costs between the upstream and downstream firms. This can lead to more efficient production and distribution, but may also raise concerns about vertical market power and foreclosure of competitors. Therefore, vertical contracts can be seen as an increase in coordination between firms producing complementary goods, as they work together to enhance their mutual interests and capture more value from the market.

​Vertical Contracts Can Also Be Seen as

Vertical Contracts Can Also Be Seen as