The main reason that the producers of wood pulp have often forward integrated into the production of paper is:
A)To increase value added by moving closer to the final customer
B)To exploit technical economies of co-locating pulp and paper making plants while avoiding transaction costs caused by transaction-specific investments
C)To reduce inventories and improve quality
D)To insulate the firm from fluctuations in the price of wood pulp.

Question

Quizplus · Accepted Answer

Forward integration into paper production allows wood pulp producers to exploit technical economies by co-locating pulp and paper plants, reducing transaction costs associated with transaction-specific investments.

The Main Reason That the Producers of Wood Pulp Have