The bargaining power of an industry's suppliers is greater when
A) the supply industry is fragmented.
B) switching costs are high.
C) the industry buys in large quantities.
D) many substitutes are available.
E) firms in the industry can threaten backward vertical integration.

Question

Quizplus · Accepted Answer

Suppliers have greater bargaining power when switching costs are high because it makes it difficult for the industry to switch to alternative suppliers without incurring significant costs. When suppliers have this kind of leverage, they can command higher prices or other favorable terms.

The Bargaining Power of an Industry's Suppliers Is Greater When