Which of the following italicized statements is/are correct and why? Consider each statement and supporting information on its own and separate from the others. Use at most 3 lines to provide a justification for each part (a, b, c, etc).

a. An upstream manufacturer U sells to downstream firms. Further, suppose that the downstream market is such that firms there are not able to establish high margins and so downstream firms make little or no profits. If downstream profits remain low, there will be no plausible justification for firm U to vertically integrate downstream.

b. Firm B buys an input from seller firm S. Firm S has strong market power because of its years of experience optimizing a difficult manufacturing process and because of its extensive portfolio of strong patents. Currently, firm S charges very high prices to firm B, and Firm B pays firm S a large share of the total value created in this supply chain. Firm B should vertically integrate to limit firm S's supplier power.

c. Firm B's manufacturing process can use the input made by firm S1 or the input made by firm S2. Firm B is considering permanently modifying its production line to work only with input from S1 (and not work at all with input from S2). Customizing its manufacturing process to S1's input would increase the value of B's final product to B's buyers. Firm B should go ahead and modify its manufacturing process to only use input from S1.

d. Consider two distinct scenarios. In scenario 1, a firm negotiates with a supplier for the delivery of an important input the quality of which can easily be verified in a court of law. In scenario 2, a firm negotiates with a supplier for the delivery of an important input the quality of which is difficult to verify in a court of law. All else being equal, vertical integration is more attractive in scenario 2.