Linearized stability analysis of a one-dimensional plasma cloud coupled to a background ionosphere shows that if the ionosphere is relatively incompressible (i.e., is at sufficiently high altitudes relative to the cloud), then ionospheric short-circuiting of the cloud leads to short-wavelength stabilization of the E¿B instability responsible for striation development. Short-circuiting reduces the polarization potential of the striations, slowing their ion cross-field negative diffusion and allowing ordinary ion cross-field diffusion to dominate and to suppress the instability at short wavelengths. A maximum in the growth rate is thereby induced at a wavelength which may be identified as the preferred scale size for striations. In contrast, if the ionosphere is relatively compressible (i.e., is at low altitudes relative to the cloud), then the ionosphere causes destabilization of the cloud, increasing the growth rate for striations of all wavelengths. In practice, these conclusions imply that plasma clouds released at twilight in the mid-latitude F1 region will be stabilized at short wavelengths by coupling with the relatively incompressible F2 region, whose conductivity (integrated along B) dominates that of the compressible (and therefore destabilizing) E region. Such clouds therefore exhibit well-defined striations with a consistent and predictable scale size. The quantitative predictions of the theory compare favorably with observations of striation development in an actual mid-latitude twilight barium release. On the other hand, at equatorial latitudes or during the day the integrated conductivity may be dominated by the E region. Under these circumstances the E region compressibility may lead to destabilization for all wavelengths, and the consistent formation of well-defined striations with a predictable scale size is not to be expected. The destabilizing influence of the E region is not caused by Hall currents but is simply a consequence of the compressibility of E region motions.