Abstract The natural progression of generators and retailers, following electricity deregulation, to vertically integrate is a contentious subject involving, at one extreme, expectations that a laissez- faire market approach will deliver economic benefits to all participants, and at the other extreme, suspicions that the unusual features of the electricity sector, in providing generators with market power, may not provide electricity consumers with an improved outcome. The objectives of this thesis were to: understand fully the drivers of generators and retailers to vertically integrate and to apply this knowledge to the Queensland electricity market to determine the financial impact on generators, retailers and consumers from vertical integration (VI). A literature review was undertaken of VI in a generic sense, noting the distinction between market contracting and ‘internalisation’, with particular reference to the writings of Oliver Williamson. The Federal Court case involving Australia’s largest electricity retailer, Australian Gas and Light Ltd, seeking approval to purchase a minority shareholding in the Victorian generator Loy Yang Power, was closely examined from the perspectives of theoretical and practical electricity sector VI integration issues. A quantitative analysis was undertaken of an assumed 60% VI of the Queensland electricity market to assess the costs and benefits to generators that vertically integrated and to consumers. The quantified generator benefits included margin elimination, savings in overheads, more rapid decision-making, and demand side management (DSM) savings in deferred capital expenditure on peaking generation and network expenditure through reduced peak demand. To support the quantitative analysis, two scenario models were developed. The first model replicates the process by which generators build up revenue certainty over time from hedge contract sales and bidding of output into the electricity grid. How generator bidding behaviour is affected by the level of hedge cover and hedge contract prices is examined, particularly in regard to how this behavior is affected by the competitive relationship between retailers and generators. The second scenario model replicates the attitude of vertically integrated generators (VIGs) towards offering DSM services by observing how the attitude of individual VIGs is affected by level of peaking generation and by the generation-to-retailing output proportion. It was determined that a combination of these features and particular market scenarios could result in some VIGs being financially worse off by providing DSM services, an important conclusion in the context of the increased community focus on energy conservation. The extent to which VIGs pass on VI and DSM benefits to consumers was calculated under scenarios of weak and strong retail competition. Of most relevance was the difference in market behaviour between retailers that had became vertically integrated, and those that had not, with the latter expected to become less competitive in both the wholesale and retail markets. This outcome was observed to provide generators with additional market power potential, a subject closely examined. The quantitative analysis of the Queensland market concluded that the maximum possible benefit that consumers could expect from VI was $138 million per annum with current DSM technology and strong retail competition, increasing to $156 million per annum if DSM technology improved, for example in regard to more cost-efficient meters. Total possible benefits to VIGs and consumers was estimated at $321 million per annum, so that consumers could expect to receive no more than 50% of total expected benefits from VI. This conclusion is not surprising because generators will only seek to be vertically integrated if they perceive clearly identified benefits from VI. The reasons why consumers are unlikely to receive benefits greater than this are: • $30 million per annum of internal savings being retained by VIGs; • VIGs achieving a minimum $60 million per annum additional revenue benefits through wholesale and retail price increases, arising from their stronger generation and retail positions; and • $75 million per annum of potential DSM benefits not being offered to consumers, because of the reluctance of VIGs to provide DSM services where the outcome could be reduced export revenue, reduced sales revenue and lower pool prices. In summary, using the Queensland market as a case study, in a strongly competitive retail market consumers could expect to receive, at the most, 50% of VI and DSM benefits. However in a weakly competitive retail market, where VIGs retain most of the benefits and are able to achieve higher wholesale prices, the outcome could instead be an overall cost to consumers. The thesis concludes with a brief discussion of policy implications and approaches to addressing key issues arising from increasing VI in deregulated electricity markets.

I empirically examine the choice of a firm’s vertical boundaries—specifically, the decision to use supplier-customer contracts instead of either using markets or vertical integration. I examine the determinants of supplier-customer contracts using data on a customer’s contractual purchase obligations with its suppliers. Contracting propensity is positively related to supplier relationship-specific investments (RSI), the supplier’s relative bargaining power, and vertical integration costs, and negatively related to contracting costs, alternative sources of information about the customer, and the percentage of a customer’s input traded on financial markets. I also find that customer firms which have product market contracts with their suppliers have better relative performance. These performance effects are enhanced by relationship-specific investments and are robust to corrections for endogeneity. Additionally, I examine the choice between vertical integration versus supplier-customer contracts and find that the choice is predicted by the type of RSI. Consistent with theory, RSI measured using tangible (intangible) assets are positively related to integration (contracts). Further, positive (negative) shocks to industry-level intangible investment are related to increases in a firm’s contracting activity and decreases (increases) in the level of vertical integration, while positive (negative) shocks to industry-level tangible investment are related to decreases in contracting activity and increases (decreases) in the level of vertical integration. My results suggest that market frictions play an important role in shaping supplier-customer contracting activity and firm boundaries.

Research Objective The purpose of this study is to profile market factors and organizational characteristics associated with community hospitals¡¦ vertical integration into a nursing facility through the lens of resource dependence. Data Sources Data for this study were drawn from three sources: the 2002 secondary data collected by Taiwan Community Hospital Association (TCHA) on a regular yearly basis; the 2001 secondary data compiled by Taiwan Association of Long-Term Care Professionals (TALTCP); and the 2002 area-based population data gathered by Department of Budget, Accounting, and Statistics (DOBAS) in local governments respectively. Study Design This study is a one-year cross-sectional design with community hospitals as the unit of analysis. A sample of 248 community hospitals was the focus of this study. Since the dependent variable is dichotomous, the logistic procedure was used to fit the regression. The analysis was performed using the statistics software, SPSS 10.0. Findings A higher ratio of the elderly, a high degree of competition, and the provision of dialysis and home care services spur community hospitals on to vertical integration into a nursing facility. Occupancy rate, the rehabilitative service, respiratory care service, high technology, the ratio of MDs to staffed beds, as well as the ratio of RNs and LPNs to staffed beds bear no reference to community hospitals¡¦ vertically integrating a nursing facility. Conclusion Not all community hospitals are equally good candidates for stepping into the avenue to nursing facility. Given the environmental factors, community hospitals situated in highly competitive district areas with a higher ratio of the elderly are more likely to vertically integrate a nursing facility. In terms of organizational factors, the provisions of dialysis service and home care service have a significant relationship with the likelihood of vertical integration.

Merger and collusion has become a popular and widespread activity between firms in the recent years. By doing this, firms can involve all the values which was created by their own factories to themselves. Manufacturers can not only raise their own profits but also diminish the uncertainty risk of purchasing middle material by vertical integrations. It has become a trend to integrate and collusion between firms. Vertical integrations bring more profits, but it also causes monopoly and forcing out. Vertical integrate can raise the market price, and it causes market foreclosure. As a result, the social welfare and the market competitive ability will be affected. General speaking, market foreclosure can be classified into full market foreclosure and partial market foreclosure according to the interrupting level to the middle material market. The manufactures use these two strategies to attain the highest profits. This article uses the Cournot model of oligopoly competition in successive market, and we use Cournot competition by different stages. We assumed the downstream as the price taker of middle material, and the price of final goods will be different according to the variety and substitution of the products. We figure out the appropriate final quantity and then reverse to the quantity and price of the upstream. We use Avenel and Barlet(2000) analyzing structure of successive market, and considering the most appropriate integrated forms between present and potential firms. Secondly, under a given strategy bundle, we analyze the influence between the final goods substitution and complementary to middle material market and social welfare. We found out the influence to middle material market by the choice of integrated strategy varied by substitution or complementary of final goods.

As China¡¦s technology of aquaculture is raising, the aquatic products is raising. But the lack of the medium to integrate, the aquatic products also supply exceeds the demand. So in order to let the price stable and to build up a complete marketing system. To build up P.D.C. and cooperate with the professional marketing company is necessary. To strategic league or vertical integration will be the trend of future. As the rapid development of China¡¦s economy. China¡¦s GDP is raising. So China¡¦s consumption and living style is changing. And to increase the business ability of creation and the brand¡¦s value. It became the victory factor of China¡¦s enterprise. In the past, the marketing process of aquatic products is focus on a terminal market process. But the retail sell process faces the hardship. So the marketing system of aquatic products changing is affect by the retail sell process. And it is a good way through the super market to marketing the aquatic products. In this paper, I analyze the income level, the consumption of aquatic products, the degree of female education and family members of China¡¦s coastal cities. As a result, Shanghai, Beijing and Guangdong have potential to develop. In addition, this paper shows the deep analysis of marketing strategies.

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Avregleringen av Sveriges järnväg ledde till att Statens Järnvägar delades upp i olika företag, SJ AB bildades som har i uppgift att bedriva lönsam persontrafik. Avregleringen har haft en stor påverkan på hur SJ bedriver sin verksamhet idag samt lett till att komplicerade ägarförhållanden har uppstått i Hagalund. Hagalund är SJ’s största depåanläggning för underhåll av fordon. I samråd med SJ’s Division Fordon och Divisionen för Planering och Trafikledning har vi fått i uppdrag att undersöka hur SJ påverkas om de införskaffar en depå i egen regi. Vi har valt att undersöka SJ ur ett värdekedjeperspektiv. Studien bygger sedan på hur SJ’s värdekedja påverkas om en ny depåanläggning införskaffas. Vi har använt Porters värdekedja som grund till vår studie, det är en analysmetod som kartlägger en organisations värdeskapande aktiviteter. Vi har även tagit del av forskning som gjorts på Porters värdekedja med fokus på resurshantering och informationsprocesser. För att kunna undersöka problemområdet har vi även undersökt och analyserat forskning inom det teoretisk omtrådet vertikal integration. Vertikal integration innebär att en organisation införskaffar en verksamhet till egen regi. Den här studiens syfte är att undersöka hur en organisations värdekedja påverkas om en vertikal integration utförs. För att besvara syftet har vi undersökt hur de sekundära aktiviteterna i SJ’s värdekedja påverkas om en primär värdeskapande aktivitet vertikalt integreras. Vi har även i delsyfte att undersöka vilka effekter den nya depåanläggningen skulle ha på SJ’s produkt tågresor som säljs till kund. Vi besvarar både syftet och delsyftet genom en deduktiv kvalitativ undersökning. Vi använde oss av en semistrukturerad intervjumetod där vi intervjuade respondenter från SJ’s Division Fordon och Divisionen för Planering och Trafikledning. Vår övergripliga slutsats av studien är att en vertikal integration har en inverkan på SJ’s värdekedja. Den vertikala integrationen medför en förbättrad kommunikation samt kontroll av depåverksamheten och dess resurser. SJ’s depåverksamhet blir mer flexibel vilket kan leda till snabbare reaktioner vid oväntade händelser. Kvalitén av produkten tågresor påverkas även positivt. Förutsättningen till dessa fördelar är att SJ har en god kommunikation med nya depån samt införskaffar de resurser som krävs.

The last decade has witnessed substantial changes in organizational structure, inter-organizational relations and the nature of competition. In particular, the realization of interdependencies across firm boundaries has brought forth a range of mechanisms for coordination among firms in vertically related stages of production, or among direct competitors in the same industry. Our objective is to study inter-organizational relations in an oligopolistic setting to explore the interactions between efficiency and strategic incentives for organizations to engage in various forms of coordination, vertically or horizontally. Specifically, we employ a game-theoretic approach to analyze organizational structure and coordination incentives in relation to process innovation, transfer pricing, and degree of competition between products. This study is divided into four parts. / In the first part, we look at the impact of manufacturer's investments in process innovation to reduce production costs on distribution channel structure, and vice versa. We show that the optimal channel structure decision depends on interactions between two parameters: degree of product differentiation and the extent of production cost reduction. These parameters represent the two primary 'generic strategies' that most organizations follow in order to gain competitive advantage. Second, we show that decentralized manufacturers invest less in process innovation than integrated manufacturers do. However, manufacturers may prefer decentralized, non-coordinated channels to perfectly coordinated channels when product substitutability is high, contrary to efficiency and transaction-cost based arguments for increased coordination. / In the second part, we relax the assumption that a manufacturer has a choice only between integration (or 'hierarchy') and decentralization (or 'market'). Various means of channel coordination are analyzed, and ownership is assumed to be distinct from the particular coordination mechanism employed. It is shown that the consideration of the competitive environment changes incentives for, and benefits to, coordination in various Production, Inventory, and Pricing decisions among members of a supply chain. / In the third part, we focus on horizontal cooperation among firms, ignoring the vertical relations. We consider the possibility of technological spillovers in the process innovation efforts of the manufacturers, and their incentives to engage in cooperative R&D agreements with rivals in the same industry. We develop a two-stage game model with manufacturers producing differentiated products, and establish fairly general conditions under which different cooperative arrangements would be beneficial both for manufacturers and consumers. / In the fourth part, we merge the above two dimensions, i.e., we investigate the interactions between horizontal cooperative agreements among rival manufacturers and vertical coordination arrangements along the supply chain. The models above are extended to incorporate the triple influence of technological spillovers and research joint ventures, along with demand and cost side parameters, on supply chain coordination incentives. We argue that a better understanding of such interactions is crucial in explicating a more relevant theory of the firm.

In this paper a vertically structured duopolistic market with unionized price setting firms is analyzed. The form of the contract of the transactions between upstream and downstream firms can be linear pricing, franchising or vertical integration. It is known from literature (Irmen 1997) that the price elasticity of the industry demand and the degree of product differentiation are the decisive factors in the determination of the profit maximizing form of the contract. In this paper it is shown that the bargaining power of the union is an additional factor. With a higher bargaining power linear pricing becomes less preferable. (author's abstract) / Series: Department of Economics Working Paper Series

In this paper I analyze a vertically structured monopolized market with unionized firms. I compare two types of contracts: vertical integration and franchising. With franchising and wage bargaining at the firm level the union in the downstream firm is either very powerful or has no bargaining power at all, depending on the specific time structure of the model. These arguments could make integration preferable for the profit owners even if integration is accompanied by small transaction costs. (author's abstract) / Series: Department of Economics Working Paper Series