Bottleneck co-ownership as a regulatory alternative

This paper proposes a regulatory mechanism for vertically related industries in which the upstream “bottleneck” segment faces significant returns to scale while other (downstream) segments may be more competitive. In the proposed mechanism, the ownership of the upstream firm is allocated to downstream firms in proportion to their shares of input purchases. This mechanism, while preserving downstream competition, partially internalizes the benefits of exploiting economies of scale resulting from an increase in downstream output. We show that this mechanism is more efficient than a disintegrated market structure in which the upstream natural monopoly bottleneck sets a price equal to average cost.Regulation, vertically related industries, co-ownership

Outsourcing and Vertical Integration in a Competitive Industry

We develop a partial equilibrium, perfectly competitive framework of a (potentially) vertically integrated industry. There are three types of firms: upstream firms that use primary factors to produce an intermediate; downstream firms that use primary factors and intermediates to produce a final good; and vertically integrated firms that do both. We establish conditions under which vertically integrated firms exist and outsource (part of) the production of the intermediate input. We study the changes in industry configurations resulting from changes in costs and demand

Outsourcing and Vertical Integration in a Competitive Industry

We develop a partial equilibrium, perfectly competitive framework of a (potentially) vertically integrated industry. There are three types of firms: upstream firms that use primary factors to produce an intermediate; downstream firms that use primary factors and intermediates to produce a final good; and vertically integrated firms that do both. We establish conditions under which vertically integrated firms exist and outsource (part of) the production of the intermediate input. We study the changes in industry configurations resulting from changes in costs and demand

Bottleneck co-ownership as a regulatory alternative

This paper proposes a regulatory mechanism for vertically related industries in which the upstream “bottleneck” segment faces significant returns to scale while other (downstream) segments may be more competitive. In the proposed mechanism, the ownership of the upstream firm is allocated to downstream firms in proportion to their shares of input purchases. This mechanism, while preserving downstream competition, partially internalizes the benefits of exploiting economies of scale resulting from an increase in downstream output. We show that this mechanism is more efficient than a disintegrated market structure in which the upstream natural monopoly bottleneck sets a price equal to average cost

What Explains Personality Covariation? A Test of the Socioecological Complexity Hypothesis

Correlations among distinct behaviors are foundational to personality science, but the field remains far from a consensus regarding the causes of such covariation. We advance a novel explanation for personality covariation, which views trait covariance as being shaped within a particular socioecology. We hypothesize that the degree of personality covariation observed within a society will be inversely related to the society’s socioecological complexity, that is, its diversity of social and occupational niches. Using personality survey data from participant samples in 55 nations (N ¼ 17,637), we demonstrate that the Big Five dimensions are more strongly intercorrelated in less complex societies, where the complexity is indexed by nation-level measures of economic development, urbanization, and sectoral diversity. This inverse relationship is robust to control variables accounting for a number of methodological and response biases. Our findings support the socioecological complexity hypothesis and more generally bolster functionalist accounts of trait covariation