​Vertical contracts aim to

A) ​Incentivize the manufacturers to undertake costly activities,which they may not realize the full benefits of on their own
B) Incentivize the retailers to undertake costly activities,which they may not realize the full benefits of on their own
C) Incentivize the retailer and the manufacturer to undertake activities that reduce profits for the supply chain
D) ​Both A&B

Vertical contracts aim to incentivize both the manufacturers and the retailers to undertake costly activities, which they may not realize the full benefits of on their own. By entering into a vertical contract, manufacturers can encourage retailers to provide better services, such as promoting their products more effectively or investing in better sales channels, which can ultimately lead to increased sales and higher profits for both parties. Similarly, retailers can use vertical contracts to incentivize manufacturers to invest in product quality, research and development, and other costly activities that may not be profitable for them on their own.