Company A has made substantial investments in specialized assets and because of this investment, has become dependent on Company B's business. Company B could threaten to take its orders to other suppliers to drive down Company A's prices. That said, Company B is unlikely to change suppliers because it is, in turn, a major supplier to Company A and also has made major investments in specialized assets to serve Company B's needs. These companies are mutually dependent because of the specialized investment each has made to benefit the other. Thus, Company B is unlikely to renege on any pricing agreements with Company A because it knows that Company A would respond in kind. This is an example of Select one: a. hostage taking. b. credible commitment. c. parallel sourcing policy. d. market discipline. e. modularity.

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The best answer is b credible commitment Heres why Hostage taking a implies a onesided thre... View the full answer