Question

When asset specificity is very high and there is market uncertainty, then it is best for a firm to:_______.

a) vertically integrate
b) use a short-term contract
c) engage in a strategic alliance
d) buy in the open market

Answer 1

Answer: vertically integrate

Step-by-step explanation:

When asset specificity is very high and there is market uncertainty, then it is best for a firm to vertically integrate.

Vertical integration is simply when an organization or a particular business controls its suppliers. This will be beneficial as it'll help by improving efficiencies and in the reduction of costs.