Texas A&M International University ECO 3320 CHAPTER 23 1)Vertical relationships can increase profits through         providing a mechanism for firms from evading regulation creating a double-markup problem making the incentives of manufacturers and retailers unaligned preventing price discrimination       Vertical relationships can increase profits through preventing firms from evading regulation eliminating a double-markup problem making the incentives of manufacturers and retailers unaligned preventing price discrimination   Vertical relationships can increase profits through preventing firms from evading regulation creating a double-markup problem better aligning the incentives of manufacturers and retailers preventing price discrimination   Vertical relationships can increase profits through preventing firms from evading regulation creating a double-markup problem making the incentives of manufacturers and retailers unaligned facilitating price discrimination   When a supplier becomes more profitable there is increased benefits from acquiring it the benefits from a stronger firm-to-firm relationship are increased the benefits from a stronger firm-to-firm relationship are decreased there is no additional reason to acquire it   The various ways that vertical relationships can evade regulation include tying the sale of an unregulated good to a customer's choice of a regulated good unbundling regulated and unregulated goods preventing the exclusion of rival unregulated goods insuring tax rates are uniform across jurisdictions   The various ways that vertical relationships can evade regulation include tying the sale of a regulated good to a customer's choice of an unregulated good bundling regulated and unregulated goods preventing the exclusion of rival unregulated goods insuring tax rates are uniform across jurisdictions   The various ways that vertical relationships can evade regulation include tying the sale of a regulated good to a customer's choice of an unregulated good unbundling regulated and unregulated goods excluding sellers of competing unregulated goods         insuring tax rates are uniform across jurisdictions   The various ways that vertical relationships can evade regulation include tying the sale of a regulated good to a customer's choice of an unregulated good unbundling regulated and unregulated goods preventing the exclusion of rival unregulated goods exploiting differences in tax rates across jurisdictions   Double markup problems arise when upstream firms have market power downstream firms have no market power upstream and downstream products are unrelated in demand upstream and downstream firm's pricing decisions tend to increase the demand for the other product   Double markup problems arise when upstream firms have no market power downstream firms have market power upstream and downstream products are unrelated in demand upstream and downstream firm's pricing decisions tend to increase the demand for the other product   Double markup problems arise because upstream firms have no market power downstream firms have no market power upstream and downstream products are complementary in demand upstream and downstream firm's pricing decisions tend to increase the demand for the other product   Double markup problems arise because upstream firms have no market power downstream firms have no market power upstream and downstream products are unrelated in demand upstream and downstream firm's pricing decisions tend to decrease the demand for the other product   The conditions for unaligned retailer and manufacturer incentives include customers are unfamiliar with the product features before they shop for it retailers have no opportunity to educate consumers manufacturers are more efficient at education consumers demand for the product is decreased with some consumer education   The conditions for unaligned retailer and manufacturer incentives include customers are familiar with the product before they shop for it retailers have can educate consumers at the point of sale manufacturers are more efficient at education consumers         demand for the product is decreased with some consumer education   The conditions for unaligned retailer and manufacturer incentives include customers are familiar with the product before they shop for it retailers have no opportunity to educate consumers manufacturers have little scope for educating consumers demand for the product is decreased with some consumer education   The conditions for unaligned retailer and manufacturer incentives include customers are familiar with the product before they shop for it retailers have no opportunity to educate consumers manufacturers are more efficient at education consumers demand for the product is increased with some consumer education   Mechanisms that manufacturers can use to deal with misaligned retailer incentives include setting a minimum retail price allowing many retailers to sell the product in each market preventing retailers from compensating sales staff for demonstrating the product eliminate manufacturer staff that was demonstrating the product in stores   Mechanisms that manufacturers can use to deal with misaligned retailer incentives include setting a maximum retail price providing an exclusive contract to a single retailer in a market preventing retailers from compensating sales staff for demonstrating the product eliminate manufacturer staff that was demonstrating the product in stores   Mechanisms that manufacturers can use to deal with misaligned retailer incentives include setting a maximum retail price allowing many retailers to sell the product in each market compensating retailers' sales staff for demonstrating the product eliminate manufacturer staff that was demonstrating the product in stores   Mechanisms that manufacturers can use to deal with misaligned retailer incentives include setting a maximum retail price allowing many retailers to sell the product in each market preventing retailers from compensating sales staff for demonstrating the product providing manufacturer staff to demonstrate the product in stores   The conditions in which vertical relationships can enhance a firm's ability to price discriminate include the manufacturer's product is of value to multiple types of customers the costs of arbitraging the price differences across markets is large the manufacturer acquires the distributer in the higher priced market competition provide little ability for the manufacturer has to price above marginal cost   The conditions in which vertical relationships can enhance a firm's ability to price discriminate include               the manufacturer's product is of value to just one type of customer the costs of arbitraging the price differences across markets is small the manufacturer acquires the distributer in the higher priced market competition provide little ability for the manufacturer has to price above marginal cost   The conditions in which vertical relationships can enhance a firm's ability to price discriminate include the manufacturer's product is of value to just one type of customer the costs of arbitraging the price differences across markets is large the manufacturer acquires the distributer in the lower priced market competition provide little ability for the manufacturer has to price above marginal cost   The conditions in which vertical relationships can enhance a firm's ability to price discriminate include the manufacturer's product is of value to just one type of customer the costs of arbitraging the price differences across markets is large the manufacturer acquires the distributer in the higher priced market lack of competition provide the manufacturer with the ability to price above marginal cost   A characteristic of outsourcing is essentially the opposite of vertical integration likely to be profitable exactly when vertical integration is profitable it prevents a firm from focusing on its core competencies it prevents the exploitation of differing degrees of economies of scale at different points in the supply chain   A characteristic of outsourcing is completely unrelated to vertical integration likely to be profitable exactly when vertical integration is unprofitable it prevents a firm from focusing on its core competencies it prevents the exploitation of differing degrees of economies of scale at different points in the supply chain   A characteristic of outsourcing is completely unrelated to vertical integration likely to be profitable exactly when vertical integration is profitable can allow a firm to focus on its core competencies it prevents the exploitation of differing degrees of economies of scale at different points in the supply chain   A characteristic of outsourcing is completely unrelated to vertical integration likely to be profitable exactly when vertical integration is profitable it prevents a firm from focusing on its core competencies can allow for the exploitation of differing degrees of economies of scale at different points in the supply chain     if your supplier becomes more profitable you become more profitable by acquiring it you become less profitable by acquiring it acquiring it will make you more profitable if there are no synergies to exploit unless there are no synergies to exploit through acquisition, acquiring it will not make you more profitable   A requirement for acquiring a related firm to generate value is it be profitable you be profitable you will alter operations because of the acquisition all synergies between the firms were exploited before the acquisition   Acquiring a supplier because it becomes more profitable will raise the asking price to offset any increase in cash flow over time will increase your profits will decrease your profits will make you alter operations