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Author Question: Why do vertical contracts impose restraints and obligations?[br][br][b][color=black]Question ... (Read 48 times)

penguins

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on: Jun 30, 2018
Why do vertical contracts impose restraints and obligations?

Question 2

Seeking profits without producing anything
 A) is called rent-seeking
  B) is illegal
  C) usually involves government
  D) all of these choices


Athena23

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Reply #1 on: Jun 30, 2018
Answer to Question 1

The success of a vertically de-integrated chain can require efforts at one stage that those at another stage cannot easily observe or evaluate. To elicit the desired behavior, vertical contracts may impose obligations that are superficially uncompetitive but allow the creation of greater economic value.

Answer to Question 2

D


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