When manufacturers and distributors establish credible commitments to one another,they often employ
A) vertical requirements contracts
B) third-party monitoring
C) credible threat mechanisms
D) non-price tactics

Question

Quizplus · Accepted Answer

Vertical requirements contracts are agreements between manufacturers and distributors that establish specific requirements or performance metrics that must be met in order for the distributor to continue receiving the manufacturer's products. This type of agreement helps to establish trust and credibility between the two parties by setting clear expectations and providing a framework for evaluation and accountability. Other options such as third-party monitoring, credible threat mechanisms, and non-price tactics may also be employed to establish credibility, but vertical requirements contracts are specifically designed for this purpose.

When Manufacturers and Distributors Establish Credible Commitments to One Another,they