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Producer opportunism in retailing contracts

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  • Mathias Dewatripont
  • Khalid Sekkat

Abstract

This paper analyzes the role of ex post producer opportunism on the optimal design of vertical restraints. It considers vertical contracts as starting points of ex post renegotiation. It shows that the alleged room for franchisor opportunism that seems quite important in franchising contracts can be seen as an insurance device when part of the goal of the contract is to provide a stable payoff to the franchisee. This conclusion holds for various opportunistic strategies: direct eviction of initial retailers, excessive entry of new retailers on the market, or resale price maintenance used to encourage "voluntary" exit of initial retailers. Copyright 1991 by Blackwell Publishing Ltd.

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Bibliographic Info

Paper provided by ULB -- Universite Libre de Bruxelles in its series ULB Institutional Repository with number 2013/7320.

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Date of creation: Sep 1991
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Publication status: Published in: The Journal of Industrial Economics (1991) v.39 n° 5,p.595-620
Handle: RePEc:ulb:ulbeco:2013/7320

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Cited by:
  1. Affuso, L., 2000. "Intra-Firm Retail Contracting: Survey Evidence from the UK'," Cambridge Working Papers in Economics, Faculty of Economics, University of Cambridge 0022, Faculty of Economics, University of Cambridge.

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