DEFINITIONS YEAR 2 TB Flashcards
Firm
An organisation that brings together factors of production in order to produce output.
Horizontal merger
A merger between two firms at the same stage of production in the same industry.
Horiztonal intergration
The result of a horizontal merger.
Vertical merger
A merger between two firms in the same industry, but at different stages of the production process.
Backward intergration
A process under which a firm merges with a firm that is involved in an earlier part of the production process.
Forward intergration
A process under which a firm merges with a firm that is involved in an later part of the production process.
Conglomerate merger
A merger between two firms that are operating in different markets.
Multinational co-operations
A firm that conducts its operations in a number of countries
Principal-agent problem
A problem arising from conflict between the objectives of the principals and the agents (i.e. those who take action on their behalf)
