The reduction of co-ordination and hold-up problems depends on: (a) Governance arrangements (b) Manager contracts (c) Required quality of finished product (d) Cost of upstream vertical supplies (e) The firm's marginal costs

The correct answer is (a) Governance arrangements .

Reason: The governance arrangements mean the structure, processes, and rules that control how a company will operate. It also includes the committee's formation and policies. A good governance system leads to the success of a company.

The co-ordination in a company is decreasing and hold-up problems mean two parties who can work together efficiently by cooperating are refraining from the activities because of a reason that they will give high bargaining power to an opposition party and will decrease own profits. So, these problems can be reduced if there is a proper structure and specific procedures are followed under governance.

The reduction in coordination and occurrence of hold-up problems depends highly on the governance arrangements.