Complete contracting eliminates flexibility

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Reference no: EM13859559

Contracting may not be preferable to vertical integration because of which of the following conditions:

a. Complete contracting eliminates flexibility.

b. Incomplete contracting may result in large transactions costs that dissipate profits.

c. The creation of quasi--rents through contracting attracts competitors to the market.

d. Integration eliminates the need for negotiation regarding the allocation of resources in the production function.

e. None of the above explains why contracting may not be preferable to vertical integration.

Reference no: EM13859559

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