A model of vertical integration and investment in generation capacity in electricity markets: The case of the bidding game

The aim of this work is to assess the impact of (partial) vertical integration between generators and retailers on generation capacity choice and its subsequent welfare consequences. We present a framework in which final demand is perfectly inelastic and stochastic. Nevertheless, wholesale demand is elastic because of the existence of outside opportunities (mainly international transmission capacity). The model is a three-stage game. Neither transmission nor retail costs are taken into account.

In the first stage of the game, generators choose capacity only knowing distribution of demand and thus maximizing their expected profit. The second stage of the game represents the competition for market share between retailers in a market where consumers have switching costs. The former face unknown demand and maximize their utility based on two factors: the expected profit and a risk element. Finally, generators submit bid functions to the system operator given known demand and maximizing their profit during the last stage of the game. Retailers and generators interact in the wholesale market, which is cleared by the system operator whose function is to match supply (represented by the bids of the generators) and demand through a system of single price auctions. The wholesale market is the only means to buy and sell energy; there are no bilateral contracts between firms, except if they are vertically integrated.

We compare fully disintegrated and partially vertically integrated structures using a comparative statics approach. In this paper, the analysis will focus on the last stage of the game: the bidding game. We find that partial vertical integration between generators and retailers tends to lower wholesale prices but not unambiguously. Depending on which firm (vertically integrated or disintegrated generator) has installed the higher capacity and depending on level of demand, prices can stay unchanged or even rise.     

On how size and composition of customer bases affect equilibrium in a duopoly with switching costs

Switching costs may facilitate monopoly pricing in a market with price competition between two suppliers of a homogenous good, provided the switching cost is above some critical level. It is also well known that asymmetric size of customer bases makes monopoly pricing more difficult. Adding consumer heterogeneity to the model we demonstrate that also composition of each firms customer base affects pricing, and this composition may aggravate or ease the incentives to break out of the monopoly pricing equilibrium.Received: 16 August 2001, Accepted: 27 September 2004, JEL Classification: D43, L10, L13This research has been sponsored by Telenor, through the Foundation for Research in Economics and Business Administration. We thank participants at the 2002 EARIE conference in Madrid, Matthew Jackson and an anonymous referee for helpful and constructive comments to an earlier version. The usual disclaimer applies.     

The impact of vertical integration on inventory turnover and operating performance

This paper investigates how vertical integration may influence inventory turnover and firm operating performance. A causal model is developed to investigate the effects of vertical integration on three types of inventory, namely raw materials inventory (RMI), work in progress inventory (WIPI) and finished goods inventory (FGI). The model tests the interactions between inventory types and the consequences of inventory turnover performance on various aspects of firm performance including costs and profitability. In particular, path analysis supports systematic differences with respect to how vertical integration affects RMI, WIPI and FGI. Vertical integration has a positive effect on RMI and FGI turnover but no significant effect on WIPI turnover. FGI contributes to a reduction in supporting processes costs which causes an improvement in return on sales (ROSs). Vertical integration impacts ROS directly.     

Systems science serves enterprise integration: a tutorial

Enterprise integration is a major global challenge of these times. It is now possible for a new generation of practitioners to engage this challenge selectively by applying a recently articulated version of systems science (WSS). This tutorial paper argues that a half-century of disarray of the systems field can be seen as ending; and that the distillation of WSS to support a wide variety of application areas (in this instance, enterprise integration) can occupy practitioners as they harness the work program of complexity (WPOC) selectively. Carrying out the WPOC yields predictable portfolio components, consisting of a well-defined mix of tangible and intangible products. The three causes of poor intellectual productivity identified by Kenneth Boulding are nullified when appropriate role matching is achieved between WSS and enterprise integration.     

Vertical integration as a remedy for imbalances in the ‘Porterian’ value system. The Dutch financial securities industry at the beginning of the 20th century

The way of accounting for vertical integration, of this paper is based on the ‘Porterian’ value system and focuses on the relation between the creation and appropriation of value. The essence of a value system is that at each stage in the system value is created and added to the value created at previous stages. We propose that firms which are unable to appropriate the value they create at the stage they currently inhabit, would find it advantageous to integrate vertically towards stages offering a more attractive relation between value appropriation and value creation. This argument will be illustrated here by the case of a large Dutch bank that integrated vertically towards securities trading.     

Trading equilibrium in a public good economy with smooth preferences and a mixed measure space of consumers

Lindahl and Nash equilibria are often used in the theory of public good. Shitovitz and Spiegel (1998) present an example of 2-person economy with one private good and one pure public good, where the core efficient Lindahl allocation does not Pareto dominate the (inefficient) Nash allocation. In this paper we introduce the new concept of Trading equilibrium for a general public good economy with smooth preferences and a mixed measure space of consumers. We obtain that this economy admits a unique Trading equilibrium. Moreover, the Trading equilibrium induces a core allocation that strictly Pareto dominates the Nash allocation.     

Applications integration in a hybrid cloud computing environment: modelling and platform

With the development of application services providers and cloud computing, more and more small- and medium-sized business enterprises use software services and even infrastructure services provided by professional information service companies to replace all or part of their information systems (ISs). These information service companies provide applications, such as data storage, computing processes, document sharing and even management information system services as public resources to support the business process management of their customers. However, no cloud computing service vendor can satisfy the full functional IS requirements of an enterprise. As a result, enterprises often have to simultaneously use systems distributed in different clouds and their intra enterprise ISs. Thus, this article presents a framework to integrate applications deployed in public clouds and intra ISs. A run-time platform is developed and a cross-computing environment process modelling technique is also developed to improve the feasibility of ISs under hybrid cloud computing environments.     

流动人口社会融合现状与测度——基于大连市的调查数据

在快速城市化的背景下,流动人口的社会融合问题逐步成为影响城市管理的重要因素。利用对大连市1017名流动人口的调查数据,从公共服务、经济地位、社会保障、社区参与和身份认同5个方面对流动人口的社会融合状况进行了测量分析。研究结果表明,流动人口的总体社会融合程度偏低。从具体维度来看,流动人口的身份认同程度较好,而他们享受的公共服务有限,其经济地位、社会保障、社区参与的融合程度呈现出依次下降的趋势。户籍因素造成的"城乡差分"使得城—城流动人口的社会融合程度高于乡—城流动人口,而人力资本和社会资本也是影响流动人口社会融合程度的重要因素。     

The impact of power and relationship commitment on the integration between manufacturers and customers in a supply chain

Supply chain integration (SCI) has received increasing attention from scholars and practitioners in recent years. However, our knowledge of what influences SCI is still very limited. Although marketing and management researchers have investigated power and relationship commitment issues between organizations, few have examined their impact on SCI. This paper extends the power–relationship commitment theory established in Western marketing literature and links it with SCI in China, through examining the relationship between power, relationship commitment and the integration between manufacturers and their customers. We propose and empirically test a model using data collected from 617 manufacturing companies in China. The results show that different types of customer power impact manufacturers’ relationship commitment in different ways. Expert power, referent power and reward power are important in improving manufacturers’ normative relationship commitment, while reward power and coercive power enhance instrumental relationship commitment. We also found that normative relationship commitment had a greater impact on customer integration than instrumental relationship commitment. These findings are interpreted in light of national culture differences between China and the U.S. in terms of power distance and collectivism, which provide a new perspective on SCI.     

Design of a terminal solution for integration of in-home health care devices and services towards the Internet-of-Things

In-home health care services based on the Internet-of-Things are promising to resolve the challenges caused by the ageing of population. But the existing research is rather scattered and shows lack of interoperability. In this article, a business-technology co-design methodology is proposed for cross-boundary integration of in-home health care devices and services. In this framework, three key elements of a solution (business model, device and service integration architecture and information system integration architecture) are organically integrated and aligned. In particular, a cooperative Health-IoT ecosystem is formulated, and information systems of all stakeholders are integrated in a cooperative health cloud as well as extended to patients’ home through the in-home health care station (IHHS). Design principles of the IHHS includes the reuse of 3C platform, certification of the Health Extension, interoperability and extendibility, convenient and trusted software distribution, standardised and secured electrical health care record handling, effective service composition and efficient data fusion. These principles are applied to the design of an IHHS solution called iMedBox. Detailed device and service integration architecture and hardware and software architecture are presented and verified by an implemented prototype. The quantitative performance analysis and field trials have confirmed the feasibility of the proposed design methodology and solution.     

Strategic decisions regarding the vertical integration of human resource organizations: evidence for an integrated HR model for the financial services and non-financial services industry in Germany,Austria and Switzerland

We examine the drivers of vertical integration for an integrated and unified HR-process model for 42 large companies from the financial services (13 companies) and the non-financial services sector (29 companies). The basis of this paper is formed by the results of a survey analysing the structures, processes and sourcing activities of human resource organizations. We sent the survey to 500 companies in Austria, Germany and Switzerland. The survey is based on an integrated process model that uses an employee life-cycle approach and differentiates between eight HR activities.

The purpose of this paper is threefold: first, to gain insights into the current status of HR outsourcing and understand the differences between the financial services and the non-financial services industry. Second, to develop a theory-based framework (transaction-cost, resource-based, principal agent) enabling us to derive and test eight hypotheses using Ordinary Least Squares (OLS)-regression analysis in order to examine the determinants of the vertical integration of HR processes. Third, to analyse the impact of the vertical integration of HR departments on company performance and characteristics. We find significant differences in the level of vertical integration between the HR subprocesses analysed. Even the processes with increased outsourcing activities (i.e. a lower degree of vertical integration) still show a relatively high proportion of in-house production.

Regression analysis reveals a significant negative interrelationship between the relative size of the HR department compared to company size and vertical integration. This finding holds for the HR subprocesses ‘Personnel Administration’, ‘Payroll and Benefits’, and ‘Off Boarding’. Second, we find a significant negative correlation between financial performance in terms of Return-on-Equity and vertical integration of ‘HR-IT’. We also find support for the theoretical framework for the subprocess ‘HR-Top Management’. Six hypotheses (out of eight) are supported by the analyses; two of these are highly significant.

Three major findings are noteworthy when analysing company performance and the vertical integration of HR departments. First, we find that large companies (in terms of total staff and total assets) display significantly high levels of vertical integration for subprocesses which include a large amount of manual work and crucial managerial, controlling and reporting tasks (‘HR-Top Management’ and ‘HR-Controlling and Reporting’). Second, large companies (in terms of total company staff) show lower levels of vertical integration for the HR subprocess ‘HR-IT’. Third, companies that show superior financial performance in terms of Return on Equity (RoE) display lower levels of vertical integration for the HR subprocess ‘HR-IT’.     

苏南小城镇城乡一体化空间演化的新趋势——以太仓市璜泾镇为例

苏南模式开启了苏南小城镇城乡一体化发展的局面,但当前乡镇企业发展主导下的城乡混沌空间已开始阻碍社会经济的可持续发展。通过分析苏南小城镇当前空间发展的困境,提出城乡一体化空间规划应当从建立城乡空间新秩序、实现城乡空间与功能同步转型、积极融入区域发展及全面提升城乡空间品质等四个方面着手,引导城乡空间健康发展,以促进包容性增长。