In a Vertically Integrated Firm, If the Relative Importance of Administrative

question 53

Essay

In a vertically integrated firm, if the relative importance of administrative and transaction costs shifts from one to the other, what could the firm do?

---

Definitions:

Arbitration

A form of alternative dispute resolution where a neutral third party makes a decision on a dispute outside the court system.

Data Packet

A formatted unit of data transmitted over a network, containing control information and user payload, facilitating reliable communication.

Data Bus

A communication system within a computer or between computers designed to transfer data or instructions between components.

Physical Power Line

Electrical lines or cables that transmit electrical power from one location to another.