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We examine the evolution of vertical specialization in three industries: chemicals, computers, and semiconductors. Vertical specialization is the restructuring of industry-wide value chains, such that different stages are controlled by different firms, rather than being vertically integrated within the boundaries of individual firms. In some cases, vertical specialization may span international boundaries and is associated with complex international production networks. After decades of vertical specialization, firms in the chemical industry are re-integrating stages of the value chain. By contrast, the semiconductor and computer industries have experienced significant vertical specialization during the past ten years. We examine how and why these contrasting trends in vertical specialization have co-evolved with industry maturation and decline, and underscore the importance and role of both industry factors and business strategies necessary for industries to become more specialized. We also consider the effects of vertical specialization on the sources of innovation and the geographic redistribution of production and other activities. We conclude that the evolution of vertical specialization in these three industries has both reflected and influenced the strategies of leading firms, while also displays industry-specific characteristics that are rooted in different technological and market characteristics.

This chapter investigates the structure of a simple vertical competition model by exhibiting the competitive links among assemblers, component producers, and integrated firms in a generalization of Cournot's model of the vertical integration by allowing any degree of competition among cohorts. Vertical integration in the model can take place by vertical mergers, forward or backward integration. Vertical integration is highly profitable and always reduces the price of the final product. The cost-raising strategy of an integrated firm buying out unneeded component producers is profitable and detrimental to consumers only if the firm faces no competition from other integrated firms.

This article classifies empirical research on vertical integration under four approaches – value-added-to-sales, qualitative–quantitative, input–output, and microanalytic. The emphasis here is on the microanalytic approach which has accumulated the most systematic evidence to support its theoretical propositions. In particular, this article emphasizes theoretical and empirical contributions from organizational economics (especially transaction costs and agency theories) for both vertical integration and (vertical) contracting. Limitations and methodological challenges concerning the empirical testing of theories of vertical integration are addressed and suggestions for further research are provided.

This chapter highlights the characteristics of Asia through the analysis of policy-related documents by five donor countries, namely Japan, South Korea, China, India and Thailand. It will also examine the roles played by regional bodies such as the Southeast Asian Ministers of Education Organization (SEAMEO) and ASPBAE (the Asia South Pacific Association for Basic and Adult Education) as the horizontal channels influencing aid policies in respective countries. Together with the analysis of the national and organizational policies, the regional process of building consensus on the post-2015 agenda is examined, with a particular focus on the Asia-Pacific Regional Education Conference (APREC) held in August 2014.

The analysis reveals that the region has two faces: one is imaginary and the other is functional. There is a common trend across Asian donors to refer to their historical ties with regions and countries to which they provide assistance and their traditional notions of education and development. They highlight Asian features in contrast to conventional aid principles and approaches based on the Western value system, either apparently or in a muted manner. In this sense, the imagined community of Asia with common cultural roots is perceived by the policymakers across the board.

At the same time, administratively, the importance of the region as a stage between the national and global levels is recognized increasingly in the multilateral global governance structure. With this broadened participatory structure, as discussed in the chapter ‘Post-EFA Global Discourse: The Process of Shaping the Shared View of the ‘Education Community’’, the expected function of the region to transmit the norms and requests from the global level and to collect and summarize national voices has increased.

According to TCE, different forms of economic organization – markets, hierarchies, hybrid forms of various kinds, etc. – are characterized by different “syndromes of attributes,” or coherent sets of features (Williamson, 1991). Because each form of organization implements a distinctive set of governance features, each is efficient for a different type of transaction, implying trade-offs among the forms. The two key categories of features are the allocation of decision-making authority among and within firms and the intensity of the incentives facing firms and members of them. By concentrating decision-making authority, hierarchies have the benefit of facilitating “cooperative adaptation”; that is, coordinated change among two or more parties. Adaptation to new economic circumstances is, after all, the main function of an economic system (Hayek, 1945). Hierarchies are said to facilitate cooperative adaptation better than markets because unlike for markets, courts will not intervene in internal disputes and fiat is available as a last resort. This leaves more scope for the management hierarchy to use its authority to promote cooperative adaptation to unanticipated circumstances (Williamson, 1975, 1991). On the other hand, hierarchies feature weaker incentive intensity, that is, weaker links between individual or unit performance and individual or unit reward. This is because market-like levels of incentive intensity would inhibit cooperative adaptation by stimulating “autonomous adaptation” instead. Autonomous adaptation refers to adaptation by individual firms or organizational members that occurs without regard to its effects on other parties. Williamson (1985) also argues that market-like incentives lack credibility within hierarchies due to the ultimate availability of fiat. Thus, for TCE, the most fundamental trade-off between various forms of internal organization is between cooperative adaptation and incentive intensity.

We present empirical evidence on the productive efficiency of electric utilities in the United States from 1990 to 2004. This period is marked by major attempts to introduce deregulation with an expectation that it will lead to improved operating efficiency and ultimately to lower consumer prices. However, relying on improved techniques of estimating productive efficiency, we find that firms in jurisdictions that adopted deregulation have in fact lower productive efficiency, and have also experienced decreases in efficiency over time. In particular, the vertical separation of generation, a hallmark of an effort to deregulate the industry, is associated with an adverse impact on productive efficiency.

This chapter provides comments and suggestions to the lawmaker, and especially to economic policy-makers in the field of the optimal regulatory framework and implementation of sustainable practices. The main findings are as follows: (1) degradation of the rule of law in several European Union (EU) Member States and constant political undermining of the legal institutions represent the main threat for the implementation of sustainable practices and development; (2) the golden regulatory rule of thumb provides that regulatory intervention is suggested merely in cases of market failures under the condition that the costs of such intervention do not exceed the benefits; (3) over-regulation might impede implementation of sustainable practices, distort the operation of the market, undermine productivity, diminish growth and social wealth and consequently also sustainability; (4) efficiency and wealth maximization should be the lawmaker’s leading normative principle in designing the legal framework that will enable effective implementation of sustainable practices; (5) the efficient level of harmonization or subsidiarity of decision-making in the EU urges for a rigorous investigation of costs and benefits of the EU top-down harmonization policies which should lead to a better, efficient vertical allocation of sustainability agenda between EU and the Member States; and (6) The Reflection Paper on Sustainable Development Goals – “Towards a Sustainable Europe in 2030” – represents an effective institutional framework in pursue of the overall sustainability targets.

Many data situations require the consideration of network effects among the cross-sectional units of observation. In this chapter, the authors present a generalized panel model which accounts for two features: (i) network effects present through weighted dependent variables as regressors, exogenous variables, as well as the error components, and (ii) higher-order network effects due to ex ante unknown network decay functions or the presence of multiplex (multi-layer) networks among all of those. The authors outline the model, the basic assumptions, and present simulation results.