In 2019, Costco, famous for it’s $4.99 rotisserie chicken, b…

In 2019, Costco, famous for it’s $4.99 rotisserie chicken, backward-integrated into chicken production by building a massive chicken processing facility in Nebraska. [The following two questions can be answered in about two sentences each.](a) Most news outlets explained this by the fact that the chicken industry is highly concentrated (dominated by companies like Tyson and Perdue), suggesting that these companies can charge markups for chicken in excess of their costs. Why would backward integration then be advantageous for Costco, but not for most any other retailer?(b) One news outlet reported: “Bird size has also increased as the demand for chicken has increased.  Most whole chickens today are too big to fit on the Costco rotisserie production equipment. Costco needs 6 pound birds and the typical whole chicken is now 7-8 pounds from suppliers.” Suppose that Tyson could make 6-pound birds more efficiently than Costco, but it would require a facility that largely caters to Costco. Explain how a potential holdup problem might have forced Costco into backward integration (which could have happened even if the chicken industry were competitive!).

For while after the Covid pandemic, it looked like a hybrid…

For while after the Covid pandemic, it looked like a hybrid work at the office/from home arrangement, such as 3+2 days a week, was becoming the new normal. That looks less likely currently, as many large firms, as well as the federal government, are mandating “Return to office” (RTO). The Economist recently argued that working from home (WFH) should be treated as a perk, and associated with lower pay. The WSJ observed that the recent RTO mandates coincide with a much weaker (for workers) labor market than we had a few years ago. Explain (i) the Economist’s argument in terms of compensating differentials, and (ii) the WSJ’s observation in terms of the efficiency wage model.