Price versus Quantity Monitoring
In an adverse selection context, this article explores the relative usefulness of price information over quantity information. The main finding is that price monitoring can induce a sales level that is greater than the full-information sales level. This imposes additional selling costs on the agent and reduces that agent's rents. The analysis identifies sufficient conditions for the principal to prefer price monitoring over quantity monitoring. Business-format franchises exhibit many of the features of the setting analyzed here, and the article's findings have implications for designing information systems in that sector of the economy.
When requesting a correction, please mention this item's handle: RePEc:ucp:jnlbus:v:79:y:2006:i:5:p:2361-2380. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Journals Division)
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.
If references are entirely missing, you can add them using this form.
If the full references list an item that is present in RePEc, but the system did not link to it, you can help with 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 profile, as there may be some citations waiting for confirmation.
Please note that corrections may take a couple of weeks to filter through the various RePEc services.