question archive Vertical integration does not violate antitrust law when it results in a
Vertical integration does not violate antitrust law when it results in a
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Vertical integration does not violate antitrust law when it results in
a. reduced agency costs, and thus lower prices.
b. increased product offerings by the company.
c. increased market power, and thus higher prices.
d. vertical integration always violates antitrust law.
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The correct answer is a) reduced agency cost, and thus lower prices.
Vertical integration does not violate antitrust law when it results in reduced agency costs, and thus lower prices. The reduced agency costs reflect an increase in productivity, leading to an increase in market welfare. However, in the monopoly market, welfare is less because of high prices.
