a principal agent problem with heterogeneous demand distributions for a carbon capture and storage system abstract mechanism design problems optimize contract offerings from a principal to different types of agents who have private information about their demands for a product or a service we study the implications of uncertainty in agents demands on the principal s contracts specifically we consider the setting where agents demands follow heterogeneous distributions and the principal offers a menu of contracts stipulating quantities and transfer payments for each demand distribution we present analytical solutions for the special case when there are two distributions each taking two discrete values as well as a method for deriving analytical solutions from numerical solutions we describe one application of the model in carbon capture and storage systems to demonstrate various types of optimal solutions and to obtain managerial insights

economic impact of production bottlenecks caused by disasters impacting interdependent industry sectors abstract this paper provides a new linear programming model based on leontief s input output model to investigate the economic consequences of production capacity bottlenecks caused by disasters an important contribution of the paper is the incorporation of industry sectors preferences in allocating limited products services between final domestic demand foreign final demand and intermediate industries this provides support for estimating some of the indirect economic impacts of disasters the paper also considers recovery operations within disrupted sectors from the standpoint of evaluating the performance of the economy during the transition period after a disaster the models are implemented to investigate the economic consequences of electricity sector disruption in singapore and finally computational results are reported

on the effects of downstream entry we study the effects of entry in a downstream market where firms e g compaq and ibm cvs and safeway buy an input e g microprocessor grocery items from an upstream supplier e g intel procter gamble and sell their output to consumers we show demand conditions where contrary to conventional wisdom entry of a new downstream firm lowers the downstream market output and increases the consumer price thus consumers may be better off with fewer sellers in such markets we also show that this entry may cause the profit of each incumbent downstream firm to i remain unchanged ii decrease or iii even increase also for a class of widely used demand conditions the supplier s optimal price is shown invariant to the entry exit of its downstream buyer firms we classify all possible effects of downstream entry in terms of fundamental market demand conditions

supply chain competition with multiple manufacturers and retailers we study competition in a supply chain where multiple manufacturers compete in quantities to supply a set of products to multiple risk averse retailers who compete in quantities to satisfy the uncertain consumer demand for the symmetric supply chain we give closed form expressions for the unique equilibrium we find that provided there is a sufficiently large number of manufacturers and retailers the supply chain efficiency the ratio of the aggregate utility in the decentralized and centralized chains can be raised to 1 by inducing the right degree of retailer differentiation also risk aversion results in triple marginalization retailers require a strictly positive margin to distribute even when they are perfectly competitive because otherwise they are unwilling to undertake the risk associated with the uncertainty in demand for the asymmetric supply chain we show how numerical optimization can be used to compute the equilibria and we find that the supply chain efficiency may drop sharply with the asymmetry of either manufacturers or retailers we also find that the introduction of asymmetric product assortment reduces the degree of competition among retailers and thus has an effect similar to that of reducing the number of retailers we show that unlike in the symmetric chain the asymmetric chain efficiency depends on product differentiation and risk aversion because of the interaction between these features and the asymmetry of manufacturers and retailers

internal pricing and cost allocation in a model of multiproduct competition with finite capacity increments internal prices are used in practice to allocate central resources to a firms profit centers the fixed costs of capacity acquisitions are often included in these prices we examine the interaction between capacity acquisition and competition when capacity is available in fixed increments we find predictably that if the increments are small unit capacity cost is a good approximation for the internal price and if the increments are large the internal price is zero however the relationship between the internal price and the capacity increment for intermediate cases is quite irregular to the extent that it is not possible to approximate the internal price with accounting data the analysis also suggests that full cost allocation overcharges for the opportunity cost of capacity furthermore the right internal price does not act either as a way of recovering fixed costs or as a proxy for externalities such as congestion costs the conclusions are not materially altered in the case where variable costs increase at the margin and where these costs rather than hard capacity constraints are the reason to restrict output

horizontal carrier coordination through cooperative governance structures this paper examines how governance structures found in the trucking industry impact the coordination between a forwarder and its carriers including three cases no forwarder coordination direct contracting with shippers investor owned coordination price only contract and carrier cooperative coordination revenue sharing contract the carriers are engaged in a cournot competition where they decide upon service provision and truck investment economic theory predicts that integration of firms under oligopolistic competition always leads to a more efficient supply chain in the sense that prices decrease and quantities increase which reduces total profits this suggests that the benefit of avoiding double marginalization does not outweigh the benefit of upstream competition in the successive oligopoly case whereas both integrated and independent firms coexist the integrated chains do perform better in this paper we examine the interaction between governance structures a key decision when managing supply chains including that found in the trucking industry and shippers willingness to procure trucking services instead of producing them using a private fleet we find that cooperative governance can contribute to improved service provision reduced service price improved consumer surplus and improved profit for the carriers in equilibrium we use parameter values based on the swedish trucking industry and a larger grocery retailer acting as shipper to numerically illustrate the impact of different governance structures

on the optimality of the full cost pricing abstract this article is aimed at defining the full cost pricing as a leader follower game in two tier organizations i the upstream unit fixes the production capacity and uses it as a cost driver to compute the average cost ii the downstream unit operates on the market and chooses the output level on the basis of the average cost in the cournot oligopoly case the full cost pricing is compared with other pricing rules there exists a wide range of values of the fixed cost for which the full cost pricing dominates any other pricing rules in terms of gross profit

prepayment and the valuation of mortgage backed securities this paper puts forward a valuation framework for mortgage backed securities rather than imposing an optimal value minimizing call condition we assume that at each point in time there exists a probability of prepaying this conditional probability depends upon the prevailing state of the economy to implement our valuation procedure we use maximum likelihood techniques to estimate a prepayment function in light of recent aggregate gnma prepayment experience by integrating this empirical prepayment function into our valuation framework we provide a complete model to value mortgagebacked securities given an optimal value minimizing call policy a mortgage should never be called when its market value is less than its call price similarly a mortgage should be called if it is worth more than its call price however mortgagors often call their loans when the prevailing refinancing rate exceeds the contract rate on the loan dunn and mcconnell 1981 in addition some mortgagors do not call their loans when the loan s contract rate exceeds the prevailing refinancing rate the purpose of this paper is to put forward a valuation framework for mortgagebacked securities consistent with these stylized facts associated with mortgage prepayments the mortgagor s prepayment decision is integral to our valuation framework however we do not impose an optimal value minimizing call condition to price these securities rather we assume that at each point in time there exists a probability of prepaying this conditional probability depending upon the prevailing state of the economy by integrating this prepayment function into our valuation framework we provide a complete model to value mortgage backed securities to implement our valuation procedures we estimate a prepayment function given recent gnma prepayment experience we follow green and shoven 1986 by using a proportional hazards model to estimate the influence of various explanatory variables or covariates on the mortgagor s prepayment decision distinct from green and shoven we explicitly model the effects of seasoning as well as investigating the influence of interest cost savings from refinancing in addition we also consider the effects of lagged refinancing rates heterogeneity

managing supply uncertainty under supply chain cournot competition abstract we study the cournot competition between two supply chains that are subject to supply uncertainty each supply chain consists of a retailer and an exclusive supplier which has random yield we examine how the levels of supply uncertainty and competition intensity affect the equilibrium decisions of ordering quantity contract offering and centralization choice we show that a retailer should order more if its competing retailer s supply becomes less reliable or if its own supply becomes more reliable a supply chain with reliable supply can take great advantage of the high supply risk of its competing chain furthermore for decentralized chains we characterize the optimal wholesale price contracts with linear penalty under different supply risks and competition scenarios finally we show that supply chain centralization is a dominant strategy and it always makes the customers better off nevertheless if the supply risk is low and the chain competition is intensive centralization could actually decrease the supply chain profit compared with the case where both chains do not choose centralization this results in a prisoner s dilemma on the other hand if the supply risk is high and or the competition level is low centralization always increases the supply chain profit the desirability of supply chain centralization is enhanced by high supply uncertainty or low chain competition

equilibrium analysis of supply chain structures under power imbalance abstract this paper investigates the implications of channel power on supply chain stability in a setting where multiple suppliers sell substitutable products through a common retailer such supply chains have been traditionally analyzed as one or two stage stackelberg non cooperative games with all suppliers sharing balanced equal decision making power in this paper we relax this assumption and formulate game theoretic models to examine scenarios where one supplier can act as the stackelberg leader consequently we analyze new supply chain structures and introduce the notion of structure dominance a novel approach to analyze the performance of supply chains that has practical implications thus a decision maker can employ the concepts of structure dominance to determine whether there exist supply chain scenarios that are more stable than others i e less prone to power reconfigurations at both agent and group level we find that power imbalance causes significant declines in supply chain profits and the more balanced the agents are the higher their profits when demand is linear regardless of product competition it develops that neither the manufacturer stackelberg nor the retailer stackelberg supply chains are stable structures in our generalized setting but that structures where power is equally split between agents provide for best stability and performance

leadership and competition in network supply chains this paper considers network supply chains with price dependent demand by modelling them as large acyclic networks such large networks are common in the automobile and apparel industries we develop a model to analyze the effect of these large scale problems involving long sequences of contracts and show that contract leadership as well as leader position in the network affect the performance of the entire supply chain we generalize spengler spengler j 1950 vertical integration and anti trust policy j political econom 58 347 352 to a game on a contract tree for a particular supply chain and extend the concept of double marginalization so that it can be applied in the form of a transformation to each contract that is offered by one member to another in the contract tree we construct an algorithm to find the equilibrium solution and derive the optimal location of the leader optimal being the leader location that maximizes total supply chain profits our work formalizes many intuitive insights for example member profits are determined by systemwide rather than individual costs finally we model cournot competition between competing supply chains both two heterogeneous trees and multiple identical trees and show the effect of changes in leader position as well as cost structure on the equilibrium

a tax savings model for the emerging global manufacturing network the emerging global manufacturing network involves nodal location features of tax areas and international logistics zones manufacturing procedures of simple process and deep process as well as transportation arcs since choosing tax savings locations and manufacturing procedures that increase after tax profit is important to global manufacturers this study aims to present several tax savings approaches and to develop a tax savings model for maximizing after tax profit in the emerging network numerical illustration demonstrates that the proposed model is an effective approach for global manufacturers to achieve tax savings the proposed model elucidates the crucial logistics behavior associated with tax savings

rational prepayment and the valuation of mortgage backed securities this article presents a new model of mortgage prepayments based on rational decisions by mortgage holders these mortgage bolders face beterogeneous transaction costs which are explicitly modeled the model is estimated using a version of hansen s 1982 generalized method of moments and is sbown to capture many of the empirical features of mortgage prepayment estimation results indicate that mortgage holders act as tbougb tbey face transaction costs tbat far exceed tbe explicit costs usually incurred on refinancing they also wait an average of more than a year before refinancing even when it is optimal to do so the model fits observed prepayment behavior as well as thee recent empirical model of schwartz and torous 1989 implications for pricing mortgage backed securities are discussed

entry in monopoly market this paper develops new empirical models of market concentration from game theoretic models of entry we construct our models from inequality conditions that describe entrants equilibrium strategies in simultaneous move and sequential move games and use them to study the effects of entry in isolated monopoly markets for new automobiles from estimates of the market size necessary to support one and two dealers we conclude that monopoly dealers do not block the entry of a second dealer we also find that entry does not cause price cost margins to fall by much

contracting and information sharing under supply chain competition we investigate contracting and information sharing in two competing supply chains each consisting of one manufacturer and one retailer the two supply chains are identical except they may have di

an optimal design of collateralized mortgage obligation with pac companion structure using dynamic cash reserve abstract this paper presents a model for optimally designing a collateralized mortgage obligation cmo with a planned amortization class pac companion structure using dynamic cash reserve in this structure the mortgage pool s cash flow is allocated by rule to the two bond classes such that pac bondholders receive substantial prepayment protection that protection being provided by the companion bondholders the structure we propose provides greater protection to the pac bondholders than current structures during periods of rising interest rates when this class of bondholders faces greater extension risk we do so by allowing a portion of the cash flow from the collateral to be reserved to meet the pac s scheduled cash flow in subsequent periods the greater protection is provided by the companion bondholders exposure to interest loss to tackle this problem we transform the problem of designing the optimal pac companion structure into a standard stochastic linear programming problem which can be solved efficiently moreover we present an extended model by considering the quality of the companion bond and by relaxing the pac bondholder shortfall constraint based on numerical experiments through monte carlo simulation we show the utility of the proposed model

integrating sustainable chain management with triple bottom line accounting abstract triple bottom line accounting is widely advanced as a way in which firms can realise broader societal objectives in addition to increasing shareholder value in our analysis of the australian economy we integrate financial input output tables that describe the interdependencies between economic sectors with national social and environmental accounts to construct numerate triple bottom line accounts for 135 discrete sectors the accounts are portrayed against the numeraire of one dollar of gdp thus for a sector of the economy financial aspects of performance can be expressed for example as dollars of export earnings per dollar of gdp social aspects such as employment can be portrayed as minutes of employment generated per dollar greenhouse issues can be portrayed as kilograms of carbon dioxide emitted per dollar since these indicators of triple bottom line performance are referenced against financial units and are consistent with the system of national accounts they can be applied to financial accounts of a firm a service or a product and allow a robust triple bottom line account to be developed across a range of scales the critical advantage of this approach is that it includes both the direct or immediate effects as well as the indirect or diffuse effects associated with a large and distant chain of supply paths the incorporation of most indirect or upstream effects therefore expands the range of issues and effects within the analytical boundary and also includes imports and exports both products and firms can then be assessed properly in sustainable chain management scm terms thus a firm that uses a key intermediate input that requires a large amount of water for example cannot hide the environmental implications since they are revealed in the analysis of the full production chain this revelation can also underpin progress when firms acknowledge both the direct and indirect effects and improve their selection of key inputs on a wider range of criteria rather than on price alone our analysis is well developed at the economic sector level for australia and is also being applied to number of government institutions firms and individual products before the full benefits of numerate triple bottom line accounting can be applied to the equity issues of globalisation trade interdependencies between groups of typical countries will have to be analysed using these whole economy approaches this will allow country specific intensities to be applied to important items in the international production chain

the effects and incentive of vertical mergers an analysis from the view of om abstract we investigate the effects and incentive of vertical mergers in a supply chain with three types of firms i e suppliers manufacturers and integrated firms integrated firms can sell both intermediate and final goods while suppliers and manufacturers can sell only intermediate or final goods respectively whether selling intermediate goods to other manufacturers is introduced as the integrated firms endogenous decisions we find that a vertical merger always decreases the price of final products both the production quantity and the profits of each unintegrated manufacturer and integrated firm and most of the time leads to a drop in the total profit of the supply chain while it always results in a rise in the quantity of final products and social welfare second we find that market foreclosure only happens when competition among integrated firms is weak and vertical mergers occur only when competition among unintegrated manufacturers is weak finally we provide a theoretical explanation for the phenomenon of merger waves with the aid of our model

a generalized valuation model for fixed rate residential mortgages this paper uses option pricing techniques to rationally price mortgage instruments subject to both default and prepayment risk attention is given to terminations due to purely financial consideration of the mortgage contract itself as well as to personally induced terminations explicit inclusion of default in the mortgage valuation procedure also permits the valuation of insurance against such default qualitatively it is found that default differs significantly in the behavior from either prepayment or nonfinancial termination quantitatively however there is significant substitution between prepayment and default so that the addition of a default feature to the contract has only a modest impact on mortgage values unless there is substantial price volatility in the housing market or a high loan to value ratio copyright 1992 by ohio state university press

financial giffen goods examples and counterexamples abstract in the basic markowitz and merton models a stock s weight in efficient portfolios goes up if its expected rate of return goes up put differently there are no financial giffen goods by an example from mortgage choice we illustrate that for more complicated portfolio problems giffen effects do occur

the development of commercial local area resource and emissions modelling navigating towards new perspectives and applications meeting near future uk greenhouse gas ghg emissions targets will require all parts of the uk economy to contribute and in particular significant changes in business practices are required at the local level from review it was found that there is a lack of detailed business accounting and reporting of ghg emissions at the local level especially concerning supply chain impacts and small and medium sized enterprises this paper presents a framework model to generate detailed benchmark estimates of ghgs both on site and supply chain related for individual businesses and all businesses of a sector within an area the model makes use of available economic and environmental data and with similar datasets existing in other parts of the world such models may be used elsewhere the framework model is applied to an empirical case study estimates from such a framework can be used in a step by step approach to move businesses and local areas towards improved accounting reporting and sustainability including procurement the model makes use of two different accounting perspectives the production perspective on site ghgs and the provision perspective supply chain ghgs attributable to purchased inputs of a business or sectors production the new provision perspective and its consequences are explored and explained

measuring the efficacy of inventory with a dynamic input output model abstract this paper extends the recently developed dynamic inoperability input output model diim for assessing productivity degradations due to disasters inventory policies are formulated and incorporated within the diim to evaluate the impact of inventories on the resilience of disrupted interdependent systems the inventory diim can provide practical insights to preparedness decision making through explicit tradeoff analysis of multiple objectives including inventory costs and economic loss reductions the model is demonstrated in several illustrative examples to depict various nuances of inventory policies the paper then culminates in a case study that utilizes input output and inventory accounts from the bureau of economic analysis

a fuzzy linear programming enterprise input output model for optimal crisis operations in industrial complexes abstract industrial complexes may be subject to significant risk of cascading failure caused by various disruptions and emerging economies are potentially more susceptible to the impacts as less established policies are in place to deal with these issues in particular there is a need to develop adaptation strategies to ensure the resilience of industrial activities to various perturbations that may result from climate change the inherent complexity of such systems makes decision making for risk management a non trivial task that is best facilitated with the aid of mathematical models enterprise input output models have been used extensively to model production systems at different scales in this work a fuzzy linear programming enterprise input output model is developed to determine optimal adjustments in production levels of multi product systems when a crisis is induced by a loss of resource inputs the model allows for adjustments that are equitable for different decision makers that may comprise an industrial complex or a supply chain capabilities of the model are illustrated with a case study on the effect of water shortage on an aluminum production system

technical note sequential multiproduct price competition in supply chain networks we analyze a general model in which at each echelon of the supply process an arbitrary number of firms compete offering one or multiple products to some or all of the firms at the next echelon with firms at the most downstream echelon selling to the end consumer at each echelon the offered products are differentiated and the firms belonging to this echelon engage in price competition the model assumes a general set of piecewise linear consumer demand functions for all products potentially brought to the consumer market where each product s demand volume may depend on the retail prices charged for all products consumers preferences over the various product retailer combinations are general and asymmetric similarly the cost rates incurred by the firms at the most upstream echelon are general as well we fully characterize the equilibrium behavior under linear price only contracts and we show how all equilibrium performance measures can be computed via a simple recursive scheme moreover we establish how changes in the model parameters in particular exogenous cost rates or intercept values in the demand functions impact the system wide equilibrium these comparative statics results allow for the quantification of cost pass through effects and the measurement and characterization of the firms brand value lastly we illustrate what qualitative impacts various changes in the structure of the supply chain network may bring forth

conditions of reverse bullwhip effect in pricing under joint decision of replenishment and pricing abstract a reverse bullwhip effect in pricing rbp occurs when an amplification of price variability takes place moving from the upstream suppliers to the downstream customers in a supply chain in this study we investigate rbp conditions for supply chains where joint replenishment and pricing decisions are made commencing with a single stage supply chain in which a retailer faces a random and price sensitive demand we extend the results to a multi stage supply chain using a leader follower game theoretical framework we discuss rbp conditions for supply chains where newsvendor and continuous review inventory policies are employed and present numerical examples for commonly used demand functions

reverse bullwhip effect in pricing price variability is one of the major causes of the bullwhip effect this paper analyzes the impact of procurement price variability in the upstream of a supply chain on the downstream retail prices procurement prices may fluctuate over time for example when the supply chain players deploy auction type procurement mechanisms or if the prices are dictated in market exchanges a game theory framework is used here to model a serial supply chain sequential price game scenarios are investigated to show that there is an increase in retail price variability and an amplified reverse bullwhip effect on prices rbp under certain demand conditions

a supply chain network economic model with time based competition abstract this paper presents an integrated model for time cost competition between supply chains with heterogeneous customers the firms in our model can offer various time options for their production service to time sensitive customers this gives rise of a new concept of time based supply chain which we call t chain to be the basic element in the competition and extends the inter supply chain competition to a new dimension of time assuming the customers are heterogeneous in time cost bi criteria decision making we integrate the discrete choice theory into supply chain network competition and formulate the equilibrium conditions as a multinomial logit based variational inequality problem numerical examples are presented for model illustration and managerial insights such as profit maximization for a firm who participates in this supply chain network

a note on the effects of downstream efficiency on upstream pricing the study of the effects of downstream entry on upstream pricing has revealed the counter intuitive result of the supplier s pricing policy being invariant to a new downstream entry under an isoelastic inverse demand function we show that this counter intuitive result is reversed when a new downstream entry affects downstream efficiency we show that in the presence of increased post entry downstream efficiency the supplier increases the wholesale price by taking advantage of the increased retail efficiency and competition we also investigate the applicability of our results under other types of inverse demand functions

aggregate production planning for process industries under oligopolistic competition abstract we consider a competitive version of the traditional aggregate production planning model with capacity constraints in the general case multiple products are produced by a few competing producers oligopoly with limited capacities production quantities prices and consequently profits depend on production and allocation decisions of each producer in addition there is competition for the raw material whose supplies are limited and where prices reflect these limitations such situations have recently occurred in several process industry settings including petro refining petrochemicals basic chemicals cement fertilizers pharmaceuticals rubber paper food processing and metals we use a successive bertrand cournot framework to address this problem and to determine optimal production quantities prices and profits at the producers and at the raw material supplier our analysis allows a new way to understand and evaluate the marginal value of additional capacity when there is competition for the market and raw materials

vertical integration with endogenous contract leadership stability and fair profit allocation abstract this paper studies vertical integration in serial supply chains with a wholesale price contract we consider a business environment where the contracting leader may be endogenously changed before and after forming the integration a cooperative game is formulated to normatively analyze the stable and fair profit allocations under the grand coalition in such an environment our main result demonstrates that vertical integration is stable when all members are pessimistic in the sense that they are sure that they will not become the contracting leader if they deviate from the grand coalition we find that in this case the grand coalition s profit must be allocated more to the retailer and the members with higher costs nevertheless we also show the conditions under which the upstream manufacturer can have strong power as in traditional supply chains

vertical integration variable proportions and successive oligopolies this paper investigates the problem of how the effect of vertical integration upon the final product price is related to the production and or market structures some ambiguous results of the previous models are shown to involve the compound effect of vertical an d horizontal merger this model considers purely vertical integration and shows that the lerner index of monopoly remains unaffected before and after merger vertical integration is shown accordingly to yield an unambiguous decrease in the final product price an increase in consumer welfare implications for antitrust laws are also discussed copyright 1988 by blackwell publishing ltd

competitive location production and market selection abstract this paper investigates how firms should select their production sites capacities and quantities under rivalry there are assumed to be a finite number of discrete potential location sites and a finite number of discrete markets which may or may not coincide firms first decide either simultaneously or sequentially whether and where to establish a production site the fixed cost of opening a facility and the marginal cost of production both depend on where the facility is located firms then choose capacity and a production quantity for each market prices in each market are determined by the total quantity available at that location via the cournot mechanism this formulation thus addresses multi market oligopolistic spatial competition with heterogeneity in production and logistics costs we then analyze the nash equilibria of the entry game and provide sufficient conditions for the existence of equilibria in the simultaneous entry game at equilibrium firms may not produce for all markets and may have limited market areas however these areas may overlap so that there are multiple suppliers in any market in general there may not be a first mover advantage and early entrants may earn lower profits than later entrants

decentralized decision making and protocol design for recycled material flows reverse logistics networks often consist of several tiers with independent members competing at each tier this paper develops a methodology to examine the individual entity behavior in reverse production systems we consider two tiers in the network collectors and processors the collectors determine individual flow functions that relate the flow they provide each processor to the overall vector of prices that the processors determine because the exact final prices are unknown each collector solves a robust optimization formulation where the prices paid by the processors are assumed to be within given ranges the processors compete for the flow from the collectors until the nash equilibrium is reached in this competitive tier which sets the vector of prices to be offered to the collectors to demonstrate the approach a numerical example is given for a prototypical recycling network

competition and regulation in vertically related markets in an industry where naturally monopolistic and competitive activities are vertically related should the natural monopolist be allowed also to operate in the deregulated competitive sector unlike much of the literature on vertical integration this paper assumes that monopoly pricing behaviour is regulated and therefore the effect of vertical integration on the task of regulation is central to the analysis in the model there is both imperfect information and imperfect competition when vertical integration by the monopolist is allowed the regulator s task is made harder insofar as the monopolist has anticompetitive incentives to raise rivals costs on the other hand integration may lead to there being fewer firms in the deregulated sector and hence less duplication of fixed costs the overall welfare comparison between separation and integration is ambiguous as two simple examples illustrate various extensions to the analysis are also considered one of the central questions in debates on regulatory reform is how to organize industries that contain both naturally monopolistic and potentially competitive activities electricity transmission and distribution are characterized by natural monopoly cost conditions but electricity generation is not in the gas industry pipeline services may be naturally monopolistic but supply to larger customers is not in telecommunications natural monopoly is more a feature of local network operations than of long distance operations and is not present in apparatus manufacture and supply or in the provision of value added services in railways while the infrastructure of track and stations is naturally monopolistic the supply of train services might not be policy developments notably those associated with privatization in britain and deregulation in the united states have sometimes led to radical structural reform in these industries at t for decades a vertically integrated monopolist was required under the 1982 settlement of its long running antitrust case against the u s government to divest itself of its local network operations the central electricity generating board cegb in england and wales was restructured both vertically transmission grid activities were separated from generation and horizontally before privatization in 1990 1991 by contrast british telecom was privatized as a vertically integrated dominant firm bt now faces competition from mercury and others especially in the long distance market but its dominance of local network operations might affect competition there and in other areas such as apparatus supply the local network monopoly would of course have to be regulated in any event but its link via ownership to vertically related and potentially competitive activities poses additional regulatory questions many of the efforts of the regulatory body oftel notably in relation to interconnection between bt s and rivals 1 for a general account of the theory and british experience of regulatory reform in the utility industries

vertical separation and horizontal mergers the author considers a duopoly setting consisting of two manufacturer retailer pairs in which the observable contract between each manufacturer retailer pair specifies a two part tariff without intraband competition the author shows that an upstream merger is anticompetitive under very general demand and cost conditions downstream merger is analyzed using linear demand and constant marginal cost and is shown not to be anticompetitive both with and without intraband competition and for both price and output competition between retailers in the premerger regime copyright 1995 by blackwell publishing ltd

input output models for the analysis of a local global supply chain abstract a supply chain can be analysed as a network of production processes which can be localised within and outside a given geographic area each process can be defined as a system that produces output flows in consequence of input flows in this paper an input output approach based on production processes is used to develop specific models that investigate flows among production processes either of a whole global supply chain or of a part of the supply chain localised within a given area local by product and waste outputs are also considered the developed models can help improve design and management of supply chains also in terms of sustainable development of a local area in fact this use of the input output analysis entails a deeper understanding of the relationships among the processes and the environment

competition in multiechelon assembly supply chains in this paper we study competition in multiechelon supply chains with an assembly structure firms in the supply chain are grouped into homogenous sectors nodes that contain identical firms with identical production capabilities that all produce exactly one undifferentiated product that may itself be a kit of components each sector may use several inputs to produce its product and these inputs are supplied by different sectors the production process within any sector is taken to be pure assembly in fixed proportions the number of firms in each sector is known the demand curve for the final product is assumed to be linear as are production costs in all sectors competition is modeled via a coordinated successive cournot model in which firms choose production quantities for their downstream market so as to maximize profits given prices for all inputs and all complementary products production quantities for sectors supplying the same successor are coordinated through pricing mechanisms so that complementary products are produced in the right proportions under these assumptions equilibrium prices for any multiechelon assembly network are characterized by a system of linear equations we derive closed form expressions for equilibrium quantities and prices in any two stage system i e a system with multiple input sectors and a single assembly sector we show that any assembly structure can be converted to an equivalent larger structure in which no more than two components are assembled at any node finally large structures can be solved either by direct solution of the characteristic linear equations or through an iterative reduction compression to smaller structures

measuring changes in international production from a disruption case study of the japanese earthquake and tsunami the earthquake and tsunami that struck japan on march 11 2011 caused a tremendous loss of life and property the disaster also disrupted global supply chains which was blamed for anemic growth in the global economy a multiregional input output model can quantify the international impacts on production due to changes in demand from companies reducing their orders because of a disruption by using the input output model to conceptualize a supply chain we present a unique method for calculating indirect production losses caused by disabled production facilities methods for calculating the possible transfer of demand to industries in other countries are also discussed we apply the multiregional input output model to the japanese earthquake and tsunami comparing results generated by japanese consumer sales with those generated by japanese production data reveals that japanese demand was satised by other countries and that inventory in the production pipeline likely allowed consumer sales to remain strong

competition and structure in serial supply chains with deterministic demand supply chains often consist of several tiers with different numbers of firms competing at each tier a major determinant of the structure of supply chains is the cost structure associated with the underlying manufacturing process in this paper we examine the impact of fixed and variable costs on the structure and competitiveness of supply chains with a serial structure and price sensitive linear deterministic demand the entry stage is modeled as a simultaneous game where the players take the outcomes of the subsequent post entry cournot competition into account in making their entry decisions we derive expressions for prices and production quantities as functions of the number of entrants at each tier of a multitier chain we characterize viability and stability of supply chain structures and show using lattice arguments that there is always an equilibrium structure in pure strategies in the entry game finally we examine the effects of vertical integration in the two tier case altogether the paper provides a framework for comparing a variety of supply chain structures and for studying how they are affected by cost structures and by the number of entrants throughout the chain