TRUE. Transaction-specific (specific and valuable) investments make events to an trade susceptible to being taken gain of (opportunist behavior) , and vertical integration solves this problem.
The required details for vertical integration in given paragraph
In microeconomics, control and global political economy, vertical integration is a time period that describes the association wherein the deliver chain of a business enterprise is incorporated and owned via way of means of that business enterprise. Usually every member of the deliver chain produces a different product or service, and the goods integrate to fulfill a not unusual place need. It contrasts with horizontal integration, in which a business enterprise produces numerous objects which are associated with one another. Vertical integration has additionally described control styles that carry massive quantities of the deliver chain now no longer best beneath Neath a not unusual place possession however additionally into one corporation.
Vertical integration and growth is favored as it secures components wished via way of means of the organization to supply its product and the marketplace had to promote the product. Vertical integration and growth can turn out to be unwanted while its movements turn out to be anti-aggressive and hinder unfastened opposition in an open marketplace.
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