Abstract:

There are three forms of vertical relationship in a transnational corporation(TNC), namely, market transaction, vertical integration, and vertical restraint.The model indicates that the vertical restraint and vertical integration have more similar effects.A corporation can obtain an integration result by means of a non-integration form.A transnational corporation will select a certain form of vertical relationship at a given time and select another form in another period, even a combination of basic forms of vertical relationship, since every form has its own advantages owing to cost and various beneficial factors.

Key words: transnational corporation, selection of vertical relationship, vertical integration, vertical restraint