1. Double-Sided Externalities and Vertical Contracting : Evidence from European Franchising Data
- Author
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Chaudey, Magali, Fadairo, Muriel, Centre de Recherche Economique de l'Université de Saint-Etienne (CREUSET), Université Jean Monnet [Saint-Étienne] (UJM)-Centre National de la Recherche Scientifique (CNRS), and Beudon, Soledad
- Subjects
Agency theory,econometrics of contracting,vertical restraints ,Agency theory ,[SHS.ECO] Humanities and Social Sciences/Economics and Finance ,vertical restraints ,[SHS.ECO]Humanities and Social Sciences/Economics and Finance ,econometrics of contracting - Abstract
This paper deals with contractual design and vertical relationships within a franchise chain, in the field of the literature on share contracts. Within a double-sided moral hazard, the contract sharing the profit generated by the vertical decentralized structure results from the necessity to incite both the franchisee and the franchisor. This paper takes into account the five franchisor incentive mechanisms in order to study the chosen type of vertical coordination in different contexts. Using a multinational European dataset, we provide evidence that the two-sided externalities and monitoring costs have an influence on the type of vertical coordination in the network
- Published
- 2009