Chapter 4

Question 1

What is agency efficiency?

Answer 1

Refers to the extent to which the exchange of goods and services in the vertical chain has been organized to minimize the coordination, agency, and transaction costs

Question 2

What is technical efficiency

Answer 2

Represents the degree to which a firm produces as much as it can from a given combination of inputs (least-cost)

Question 3

What is tapered integration

Answer 3

represents a mixture of vertical integration and market exchange

Question 4

What are alternatives to make or buy?

Answer 4

1. Tapered integration, in which the firm both makes and buys a given input;
2. Franchising
3. Strategic alliances and joint ventures
4. close-knit semiformal relationships among buyers and suppliers,