Model Of Vertical Integration Research Articles

Assessing carbon capture and storage technology in industrial joint venture

Carbon Capture and Storage (CCS) technology can effectively reduce carbon dioxide emissions from industrial and energy production processes. Yet the commercialization of CCS technology is hampered by financial requirements. Existing research compares the costs and benefits of business models for individual CCS projects, no studies assess the industry and national levels. Here we use a dynamic computable general equilibrium model, constructure the vertical integration and joint venture business models for CCS. This study assesses the emission and economic impacts of joint ventures between China's high-emission industries and their upstream and downstream sectors. We find that adopting the joint venture model in the coal power sector, compared to the vertical integration model, initially exerts a negative economic impact but can mitigate 0.04 % of GDP by 2060. The chemical industry consistently benefits from the joint venture model both economically and in emission reductions. Downstream sectors of the steel and cement industries are unsuitable for participation in joint ventures. In addition, the joint venture model has significant industry linkage effects, affecting energy consumption, the scale and cost of CCS deployment. This work provides important information for the large-scale commercialization of CCS technology.

Exploring Cooperative Mechanisms in the Chinese Agricultural Value Chain: A Game Model Analysis Based on Leading Enterprises and Small Farmers

In the context of agricultural modernization in China, this paper examines the micro-level perspective of agricultural value chains. Drawing from three primary models of agricultural value chain cooperation—namely, “leading enterprises + small farmers”, “leading enterprises + cooperatives + small farmers”, and “corporate integration”—it establishes four game models: the decentralized decision-making game model, the two revenue-sharing game models, and the centralized decision-making game model. It systematically analyzes the cooperation mechanisms between leading enterprises and small farmers in upstream production links of the agricultural value chain, aiming to improve the cooperation strategy between leading enterprises and small farmers, elevate the status of small farmers in the agricultural value chain, promote increased income for farmers, and strengthen the agricultural value chain. The research findings are as follows: Firstly, the traditional contract of “leading enterprise + smallholder farmers” is incomplete, which makes it difficult to avoid opportunism and moral hazard that may arise between the two parties. By comparing multiple parameter values, it is found that this model is at a lower level of agricultural value chain development. Secondly, the model of “leading enterprise + cooperative + smallholder farmers” improves the tightness and stability of cooperation between leading enterprises and smallholder farmers. This model explains to some extent the operability of smallholder farmers sharing the value of the agricultural value chain. Compared with various parameter values, this model is at a medium level between other models. Finally, the “corporate integration” model is a fully vertical integration model. Compared with various parameter values, this model is at an advanced stage of agricultural value chain development. Therefore, agricultural value chains will ultimately develop toward the direction of corporate integration. This study has positive practical significance for enhancing the status and claim rights of small farmers, promoting increased income for farmers, enhancing the consistency of values between leading enterprises and small farmers, strengthening the stability of the agricultural value chain, and ultimately achieving common prosperity and agricultural modernization in China.

Competitive Strategies of New Energy Vehicle Enterprises: Taking BYD as an Example

The new energy automobile industry is experiencing rapid growth, with BYD emerging as a prominent player due to its market competitiveness and innovation capabilities. This study focuses on BYD’s development of new energy vehicles and analyses its competitive strategy. BYD is featured by its vertical integration model, focusing on technological innovation and independent research and development. It has a high potential for development under the domestic conditions of large market size and rapid technological development. Through SWOT analysis and the construction of Porter’s Five Forces model, this thesis points out the importance of cost control, development and innovation, and expansion of user scale of this company. In addition, this paper analyses the company’s aspects that need to be improved and puts forward corresponding suggestions for improvement. This thesis aims to provide suggestions and references for the development of BYD’s new energy vehicles and hopes to promote the further development of China’s new energy vehicles.

Permission or Prohibition of Vertical Integration: the Experience of the Russian Freight Rail and Power Industry

Despite the presence of a positive effect from the development of competition, confirmed both in theory and in practice, in a crisis, priorities can be given to short-term effects of the financial stability of a business. The authors analyzed the state of the industries of electricity generation and freight rail transportation in terms of their vertical integration model and financial results of companies, including an assessment of the cost of the latter's business. The choice of industries is justified by the absence of vertically integrated companies in the first industry and their presence in the second, which allows us to analyze the causes and consequences of allowing vertical integration for companies in backbone industries. The results of the analysis of financial multipliers show that in the case of vertical integration of railway companies with an infrastructure organization, there is no “premium” to the value of the business relative to non-integrated companies. This leads to the conclusion that integrated companies in the industry do not receive unconditional advantages over nonintegrated players. At the same time, vertical integration and competition are not connected by an unambiguous causal relationship, however, the experience of the studied industries demonstrates that vertical integration may not hinder the development of competition in the industry. We assume that a further increase in the level of competition in the electricity market can be ensured by separating assets in the formed wholesale market, even if the ban on vertical integration is lifted.

Business model and supporting policies for projects to implement carbon capture and power-to-gas technologies

The project portfolio of carbon capture system and power to gas (CP project) is considered to be a key technology combination for achieving carbon emission reduction and recycling in the future. However, due to a dearth of associated engineering practices and business activities, there is no widely used business model for the large-scale deployment of the CP technology portfolio. The design and evaluation of the business model is crucial for projects with a long industrial chain and complex relationships between stakeholders, such as CP projects. Based on carbon chain and energy flow, this paper analyzes the cooperation mode and profitability among stakeholders in the CP industry chain, selects three suitable business models, and establishes nonlinear optimization models under the three business models. By analyzing the key factors (e.g. carbon price) that can promote investment and have policy influence, the tipping points of the key factors and the cost of support policies are given. Results show that the vertical integration model has the greatest demonstration deployment potential since it has the best performance in terms of cooperation and profitability realization. However, required crucial factors in the CP projects vary from business models, policy makers need to take appropriate supporting measures prudently.

Research on CCUS business model and policy incentives for coal-fired power plants in China

Carbon capture, utilization and storage (CCUS) is currently the most potential cutting-edge emission reduction technology in China to achieve the vision of carbon neutrality. The industrialization of CCUS faces multiple challenges such as high cost, technical security and public acceptance, but the lack of mature business model and corresponding incentive policies is the main restrictive factor affecting the industrialization of CCUS technology. Therefore, exploring a feasible CCUS business model and formulating relevant incentive policies are of great significance for promoting the commercial deployment of CCUS and achieving the national carbon neutrality goal. Focusing on coal-fired power plants, this paper uses the system dynamics method to compare and analyze two different CCUS business models from the perspectives of economy, technical feasibility and emission reduction benefits, and evaluate the system operation effects under different incentive policy scenarios. The research results show that the vertical integration model is the most potential CCUS business model in China at present, and different incentive policies will cause different changes in the CCUS system. Based on the research conclusions, this paper puts forward suggestions such as formulating differentiated power generation quota subsidy policies and actively developing the carbon emission trading market.

Backward versus forward integration of firms in global value chains

This paper seeks to understand the forces determining the pattern of asset ownership in global value chains. We augment a standard model of vertical integration rooted in the property-rights theory to account for fixed integration costs and derive four channels of influence for the cross-country and cross-sector pattern of asset ownership: the relative investment intensity of sectors and countries; the relative density of markets; the relative reliance on and importance of supplying and producing country-sectors; and the relative importance of fixed integration costs. We confirm the relevance of these determinants for the observed pattern of asset ownership in a large panel of worldwide directed ownership linkages.

Economic feasibility and policy incentive analysis of Carbon Capture, Utilization, and Storage (CCUS) in coal-fired power plants based on system dynamics.

Carbon Capture, Utilization, and Storage (CCUS) is an important potential technical way for coal power plants to achieve near-zero carbon emissions with the current energy structure in China being dominated by coal. However, CCUS is still at the early demonstration stage, and there are many uncertainties in the business model and policy incentives that the traditional method can no longer handle. At the same time, few studies have analyzed these issues. Taking coal-fired power plants as the research object, we adopt the system dynamics method (SD) to compare the economic feasibility, stability, and CO2 emission reduction effect of the CCUS in the vertical integration model and the CCUS operator model. Furthermore, this paper also studies the effect of different incentive policies on CCUS. Results show the following: (1) Both models are economically viable. From the stability perspective, the CCUS operator model is superior to the vertical integration model. (2) In terms of the effect of individual policies, the government's preference for subsidies to the coal-fired power plant can significantly reduce CO2 emissions. Increasing the additional government subsidy and carbon tax can accelerate the CCUS system into a relatively stable state, but beyond a certain range, the marginal CO2 capture rate, marginal CO2 emission reduction rate, and marginal profit rate of each department will be significantly reduced. The storage enterprise highly depends on the government subsidy. Low government subsidy allocation, low additional government subsidy, and a low carbon tax will lead to continuous negative profits for the storage enterprise, making the CCUS system unsustainable. (3) The impact of combination policies on CCUS is not simply the sum of the effects of individual policies. Each policy has a counteracting or reinforcing effect on the other.

Dynamics of structural change in agriculture, transaction cost theory and market efficiency: The case of cultivation contracts between agricultural enterprises and the food industry

In developed economies, the increasing openness of markets, the ease of trade and the speed of information lead to territorial imbalance and marginalization phenomena of small agricultural activities that cannot compete with the new models of agri-food systems. In this research, starting from this situation, we analyze through the Transaction Cost Theory what can be practised too recover competitiveness margins for small farms. From the study, it emerges that cultivation contracts represent a valid tool for the solution of various marginalization problems of many agricultural enterprises. In particular, from the experience gained over the past few years in Sicily, the cultivation contract brings benefits to both the food and agricultural enterprise. The validity of the food supply chain vertical integration model is based on this aspect. • Coordination between companies is a strategy to increase competitiveness. • Transaction cost theory shows that coordination between firms increases market efficiency. • Cultivation contracts are a form of vertical coordination between companies in the agri-food chain. • Cultivation contracts improve the allocative efficiency of resources.

Effect of COVID-19 pandemic on the food supply chain

This study’s objective was to analyze institutions’ role in positioning Brazil to reduce uncertainties in food supplies related to COVID-19. We intend to demonstrate that food security must be integrated with food safety. This research is an exploratory study of COVID-19’s effects on food systems using qualitative data. This study demonstrates that public and private policies carried out at the international level are needed to avoid new health crises originated by zoonoses. The integration of public and private policies requires the following strategies: building strong institutions, strengthening the agricultural research and innovation system, public policies for sustainable agriculture, strict sanitary control laws, enhancing cold chains of animal protein production, and encouraging the vertical integration model in animal protein chains. This analytical scheme can be applied in the context of agro-industrial systems from an institutional perspective, allowing research into the effect of crises on agri-food supply chains, as in the case of the COVID-19 pandemic, as well as contributing to its prevention. It was found that demands to prevent new pandemics are: an outgrowth of the effective adoption of standard sanitary controls; coordination of agri-food systems; and public policies.

Analysis and simulation of BECCS vertical integration model in China based on evolutionary game and system dynamics

Bioenergy with carbon capture and storage (BECCS) is a key negative emission technology in response to climate change. The industrial chain of BECCS is composed of multi-agent participants: farmers, middlemen, enterprises. This paper fills a gap in BECCS research by establishing a tripartite evolutionary game model and conducting system dynamics simulation to analyze the participants’ interaction and strategy choices on system equilibrium in supply chain of BECCS under vertical integration operation model, and further discussing the influence of policy incentives on BECCS. The results show that the willingness of both enterprises and middlemen participate in the cooperation is very low under current scenario. Therefore, appropriate incentives must be taken to promote commercial deployment of BECCS. From sensitivity analysis, the following useful references for practical applications of BECCS in the future are obtained: Compared with other factors, costs of carbon storage have a more significant impact on the evolutionary trajectories and are highly sensitive to evolutionary equilibrium. The government should subsidize carbon utilization and electricity tariffs, but could not provide an initial investment subsidy for BECCS retrofit. Vigorously developing middlemen and promoting the improvement of carbon trading market and carbon tax policies are also of great significance to implementation of BECCS.

Local health units: A vertical integration model of health care

Enquadramento: As unidades locais de saúde (ULS) concretizam a integração de cuidados de natureza vertical, reunindo numa única entidade e com a mesma gestão, diferentes níveis de cuidados. Objetivos: Analisar o modelo organizacional das ULS e os potenciais ganhos económicos e em saúde. Metodologia: Estudo exploratório em que participaram cinco ULS que se localizam na zona norte e interior de Portugal. Os dados analisados incidiram sobre o acesso dos cidadãos aos cuidados de saúde, qualidade dos cuidados, eficiência produtiva e desempenho económico-financeiro, referentes ao período de 2015 a 2018. A fonte dos dados foi a Entidade Reguladora da Saúde (ERS) e a Administração Central do Sistema de Saúde (ACSS). Resultados: Pela análise dos dados da ACSS e da ERS parece haver evidência de que o modelo organizativo em ULS não traduz na prática ganhos económicos e em saúde. Conclusão: Na génese das ULS está o objetivo de criar uma melhor interligação dos diferentes níveis de cuidados, concluindo-se que este modelo de governação não aporta o valor acrescentado que teoricamente previa.

Linking Chemistry and Biology through Course-Based Undergraduate Research on Anticancer Ruthenium Complexes

Course-based undergraduate research experiences (CUREs) allow students to apply the scientific method to novel questions, which can serve as a gateway for mentored research. Here, we present a model for using cross-disciplinary CUREs to vertically integrate courses from different disciplines. This approach creates opportunities for students to (1) ask and answer authentic research questions, (2) apply knowledge from different disciplines to a research topic, and (3) expand their interest in additional research. To achieve these goals, a research theme of metal-containing anticancer drugs was used to link 100- and 300-level courses in both biology and chemistry. Across four courses, developmentally appropriate strategies were used to investigate the metal complex KP1019 (indazolium trans-[tetrachlorobis(1H-indazole)ruthenate(III)]). In chemistry courses, students synthesized KP1019 and quantitatively analyzed how novel environmental variables alter its hydrolysis and redox properties. In biology courses, students used the yeast Saccharomyces cerevisiae as a model for characterizing how environmental variables affect KP1019 bioactivity, and they performed a partial phenomic screen to identify yeast genes that influence drug sensitivity. To promote cross-talk between courses, undergraduate researchers uploaded their findings to a wiki that subsequent students used to drive the design of novel experiments. Survey and focus group results suggest the revised laboratory projects successfully engaged students in the scientific process, promoted integration of concepts from biology and chemistry, and led to a disproportionately large number of impacted students participating in mentored research. Importantly, a wide range of interdisciplinary research questions can be adapted for use with this model of vertical integration across STEM disciplines.

Self-Expansion or Internalization as the Two Processes of Vertical Integration: What Informs the Decision?

In vertical integration literature, the two processes leading to vertical integration, namely, (1) self-expansion of the scope of activities based on internal capabilities and (2) internalization of activities with external capabilities have not been distinguished. However, using internal capabilities or incorporating external capabilities is an alternative decision for managers and distinguishing them is crucial in practice. The purpose of this study is to distinguish self-expansion separated from internalization and to explain systematically when they likely occur. This study develops a unique vertical integration model by integrating transaction cost economics and the capability approach. With the model, we systematically analyzed the occurrence of (1) self-expansion and (2) internalization. Results reveal that the firm prefers self-expansion to internalization if it is easy to build the capabilities internally or difficult to procure them from outside the firm and if the costs of acquiring a firm or business with the required capabilities or the governance costs of the activities with external capabilities are high and vice versa. Our model leads to more understanding of vertical integration.

Vertical integration, peaking plant commitments and the role of credit quality in energy-only markets

Resource adequacy in energy-only markets is of continual interest to policymakers and in Australia has historically been navigated via energy retailer investment commitments in peaking plant capacity. This in turn has been driven by the National Electricity Market's very high Market Price Cap (AUD $15,000/MWh). The market is rapidly transitioning with rising levels of renewables and coal plant closures. Ironically however, investment commitments in peaking plant capacity by major energy retailers has stalled. This raises the question as to whether the model of vertical integration, a pattern which dominated energy-only markets, has somehow broken down. In this article, peaking plant dynamics are tested using historic data – first as a stand-alone generator, then as part of a merged vertical entity over 16 years of trade. Results reveal the canonical merchant peaking plant remains too risky as a stand-alone project financing, but vertical integration and energy retailer incentives to commit to on-balance sheet peaking plant remains strong, with transaction cost synergies of 13% and investment grade credit quality being contingent on integration. Any lack of commitment must be explained by other variables.

107 Raised Without Antibiotics, Lessons Learned

Abstract Smithfield Foods has initiated Raised Without Antibiotics (RWA) programs into its vertical integration model in the past. This opportunity to drive change to meet a growing demand provides an unique ability to analyze approaches to raising swine in a setting where multiple entities are tied to the success of a program and maintaining a focus of animal welfare, traceability and financial responsibilities are a must. There is a wide range of housing and resources used for industry RWA programs across those that implement such practices. Smithfield Foods program was performed in conjunction with its company-owned sow farms weaning to contracted grower bases in conventional wean-to-finish barn settings within the Midwest making it a multi-entity managed approach. Therefore, a full-package view is mandatory for the success of a RWA program and takes into account many current industry research approaches as well as fulfilling basic husbandry parameters. A focus too heavily on one will alter the ability to achieve program goals. The focus in the most recent success of the RWA program provided by Smithfield Foods included beginning with high health pig sources sourcing robust offspring, utilizing strategic vaccines and timing to combat potential obstructive issues, specific biosecurity plans, optimal environment uniformity, nutrition and water quality focuses and individual pig awareness throughout the entirety of the pig’s time in the program. Over 400,000 pigs were placed into Smithfield Foods RWA Program. The outcome of implementing the multi-faceted approach of securing the basic animal husbandry, along with newer industry knowledge and research, led to only 1.53% individual pigs needing to be taken off of the program due to requiring an antibiotic treatment and the remaining pigs within the program having high success in financial returns with competitive company growth performances.

Strategic outsourcing and quality choice: Is a vertical integration model sustainable?

This paper uses two versions of a vertical product differentiation model with price competition to investigate how strategic behavior between rival firms influences which organizational production mode each firm adopts: that is, either vertical integration or outsourcing. We show that not only a symmetric configuration, where both high‐ and low‐quality firms outsource, but also an asymmetric configuration, where the high‐quality firm produces in‐house whereas the low‐quality firm outsources, are acceptable as a subgame‐perfect equilibrium outcome. We explore the implications of these results in light of the recent slump in business of Japanese electronics enterprises in the flat‐panel television industry.

Backward Versus Forward Integration of Firms in Global Value Chains

Production processes are increasingly organized in international value-chain networks. The involved firms can be operating at arm’s length or be vertically integrated. Both the incidence and the direction of integration (backward or forward in the value chain) depend on specific characteristics of the firms and their economic environment. We propose a simple model of vertical integration in a supplier-producer relationship that is rooted in the property-rights theory to learn about the determinants of forward versus backward integrations. Generally, the profitability and direction of integration depend on the relative investment intensity of the producer and the supplier so as to align investment incentives and maximize joint surplus. Moreover, the organizational form depends on the fixed costs of firm integration and the market environment in the input market as well as the relative importance of the specific input for the final output. These results are strongly confirmed in a large panel of worldwide directed ownership linkages.

Vertical Integration of Agricultural products supply chain and quality Safety of Agricultural products

Today, food safety is a common concern in the world. As the main source of food, agricultural products’ safety is also worthy of attention. By establishing the vertical integration model of the agricultural product supply chain, the circulation links of agricultural products can be reduced, and the circulation efficiency and quality level of agricultural products can be improved. This paper assumes that under the condition of simple fresh agricultural products, there is only one wholesaler and one retailer in the agricultural product supply chain. Through the analysis of the economic model, it is concluded that the vertical integration of the agricultural product supply chain has a positive impact on the safety of agricultural products. With the improvement of the vertical integration of the supply agricultural products supply chain, the efforts of wholesalers and suppliers to ensure the safety of agricultural products have been improved, the circulation cost of agricultural products has been reduced, and the sales price of agricultural products has been reduced.

Resilient managed competition during pandemics: lessons from the Italian experience.

One of the main governance decisions that policymakers need to make is whether to implement public services via centralized or decentralized forms. As Costa et al. discuss in their article, when public services are implemented via competing systems, service providers contend to provide good services with the ultimate objective of gaining market quota. This is known as managed competition (MC), as the authorities will have to manage the panoply of public and private organizations offering the service. The alternative is to manage the service more centrally, in what it is identified as vertical integration. As the authors describe, several governments around the globe have abandoned their vertical integrated models in favour of decentralized models. This is the case, as the authors recall, for most health services in Europe. While there is an emerging body of evidence suggesting that decentralized MC outperforms vertically integrated models both in terms of efficiency and in terms of service quality, little is known on how these systems react under different circumstances. This means, for example, how these systems can cope with a sudden increase in their service demands.