1. (30) True or False (explain your answer briefly. A simple\"true\" or \"false\" without
explanation will get zero point)
a) (6 points) An upper stream manufacturing rm merges with anotherdownstream distri-
bution firm so as to engage in price discrimination. Such avertical merger will decrease all
consumer'swelfare.
b) (6 points) Two firms merge together, only if the transactioncost must be reduced.
c) (6 points) Specic human capital is a barrier of verticalintegration.
d) (6 points). The benet of coordination gives rise to verticalintegration.
e) (6 points). Social welfare decreases after two firms merge witheach other.
