Managerial Economics & Business Strategy 8th Edition by Michael Baye,Jeff Prince

Exercise 11

Argyle is a large, vertically integrated firm that manufactures sweaters from a rare type of wool produced on its sheep farms. Argyle has adopted a strategy of selling wool to companies that compete against it in the market for sweaters. Explain why this strategy may, in fact, be rational. Also, identify at least two other strategies that might permit Argyle to earn higher profits.