What are some of the major reasons why firms vertically integrate? One reason wh

Question

What are some of the major reasons why firms vertically integrate? One reason why firms vertically integrate is OA. to ensure the supply of inputs. costs. O C. to promote opportunistic behavior. O D. to take on more government regulations. O E. to avoid varying the production process. Firms may not vertically integrate when their industry is 0 A. shrinking with economies of scale. B. stable with large fixed costs. C. growing and flexibility is important. O D. small with market power. O E. large and specialization is profitable.

Explanation / Answer

to ensure the supply of inputs

It ensures that the supply is adequate since it is internally controlled.

growing and flexibility is important.

Since flexibility is present, a large capital investment is considered waste since new technologies may render the integration or a part of it obsolete.

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