Corporate Strategy Vertical Integration and Diversification

A board member argues: 'Licensing is effectively ownership.' The most accurate correction is:

• ALicensing removes opportunism entirely, while ownership increases opportunism in practice.
• BOwnership is identical to licensing, since both transfer control to the buyer.
• CContracts can reduce hazards, but ownership changes residual control rights and incentives.
• DContracts fully replicate ownership, so governance choice is always irrelevant.