Measuring economies of horizontal and vertical integration in the US electric power industry:how costly is unbundling?

This research employs econometric analysis on a cross section of American electricity companies in order to study the cost implications associated with unbundling the operations of integrated companies into vertically and/or horizontally separated companies. Focusing on the representative sample average firm, we find that complete horizontal and vertical disintegration resulting in the creation of separate nuclear, conventional, and hydro electric generation companies as well as a separate firm distributing power to final consumers, results in a statistically significant 13.5 percent increase in costs. Maintaining a horizontally integrated generator producing nuclear, conventional, and hydro electric generation while imposing vertical separation by creating a stand alone distribution company, results in a lower but still substantial and statistically significant cost penalty amounting to an 8.1 % increase in costs relative to a fully integrated structure. As these results imply that a vertically separated but horizontally integrated generation firm would need to reduce the costs of generation by 11% just to recoup the cost increases associated with vertical separation, even the costs associated with just vertical unbundling are quite substantial. Our paper is also the first academic paper we are aware of that systematically considers the impact of generation mix on vertical, horizontal, and overall scope economies. As a result, we are able to demonstrate that the estimated cost of unbundling in the electricity sector is substantially influenced by generation mix. Thus, for example, we find evidence of strong vertical integration economies between nuclear and conventional generation, but little evidence for vertical integration benefits between hydro generation and the distribution of power. In contrast, we find strong evidence suggesting the presence of substantial horizontal integration economies associated with the joint production of hydro generation with nuclear and/or conventional fossil fuel generation. These results are significant because they indicate that the cost of unbundling the electricity sector will differ substantially in different systems, meaning that a blanket regulatory policy with regard to the appropriateness of vertical and horizontal unbundling is likely to be inappropriate.

Impact of soft contact lens edge design and mid-peripheral lens shape on the epithelium and its indentation with lens mobility

Purpose. To evaluate the influence of soft contact lens midperipheral shape profile and edge design on the apparent epithelial thickness and indentation of the ocular surface with lens movement. Methods. Four soft contact lens designs comprising of two different plano midperipheral shape profiles and two edge designs (chiseled and knife edge) of silicone-hydrogel material were examined in 26 subjects aged 24.7 ± 4.6 years, each worn bilaterally in randomized order. Lens movement was imaged enface on insertion, at 2 and 4 hours with a high-speed, high-resolution camera simultaneous to the cross-section of the edge of the contact lens interaction with the ocular surface captured using optical coherence tomography (OCT) nasally, temporally, and inferiorly. Optical imaging distortions were individually corrected for by imaging the apparent distortion of a glass slide surface by the removed lens. Results. Apparent epithelial thickness varied with edge position (P < 0.001). When distortion was corrected for, epithelial indentation decreased with time after insertion (P = 0.010), changed after a blink (P < 0.001), and varied with position on the lens edge (P < 0.001), with the latter being affected by midperipheral lens shape profile and edge design. Horizontal and vertical lens movement did not change with time postinsertion. Vertical motion was affected by midperipheral lens shape profile (P < 0.001) and edge design (P < 0.001). Lens movement was associated with physiologic epithelium thickness for lens midperipheral shape profile and edge designs. Conclusions. Dynamic OCT coupled with high-resolution video demonstrated that soft contact lens movement and image-corrected ocular surface indentation were influenced by both lens edge design and midperipheral lens shape profiles. © 2013 The Association for Research in Vision and Ophthalmology, Inc.