IDEAS home Printed from https://ideas.repec.org/a/bla/jemstr/v35y2026i1p126-138.html

Optimal Pricing of Public Franchises With Imperfectly Correlated Demand Shocks

Author

Listed:
  • Marco Buso
  • Cesare Dosi
  • Michele Moretto

Abstract

In a dynamic adverse selection setting with private information about stochastic consumer preferences, we study the pricing of franchise rights when the awarding government body has to balance between revenue collection and consumer welfare. In this environment, we show that optimal pricing requires an appropriate combination of fixed and time‐variable transfers between the parties. Notably, our findings suggest that it might be optimal to occasionally subsidize rather than charge the franchisee when consumers' willingness to pay increases well beyond initial expectations.

Suggested Citation

  • Marco Buso & Cesare Dosi & Michele Moretto, 2026. "Optimal Pricing of Public Franchises With Imperfectly Correlated Demand Shocks," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 35(1), pages 126-138, February.
    • Handle: RePEc:bla:jemstr:v:35:y:2026:i:1:p:126-138
    DOI: 10.1111/jems.12639
    as

    Download full text from publisher

    File URL: https://doi.org/10.1111/jems.12639
    Download Restriction: no
    File URL: https://libkey.io/10.1111/jems.12639?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Di Corato, Luca & Moretto, Michele, 2026. "Dynamic Adverse Selection with Flow Limited Liability: A Closed-Form Approach to Price Regulation," FEEM Working Papers 396239, Fondazione Eni Enrico Mattei (FEEM).

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:bla:jemstr:v:35:y:2026:i:1:p:126-138. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Wiley Content Delivery (email available below). General contact details of provider: http://www.kellogg.northwestern.edu/research/journals/JEMS/ .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.