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Producer Opportunism in Retailing Contracts

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  • Dewatripont, Mathias
  • Sekkat, Khalid

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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  • Dewatripont, Mathias & Sekkat, Khalid, 1991. "Producer Opportunism in Retailing Contracts," Journal of Industrial Economics, Wiley Blackwell, vol. 39(5), pages 595-620, September.
    • Handle: RePEc:bla:jindec:v:39:y:1991:i:5:p:595-620
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    Cited by:

    1. Affuso, L., 2000. "Intra-Firm Retail Contracting: Survey Evidence from the UK'," Cambridge Working Papers in Economics 0022, Faculty of Economics, University of Cambridge.
    2. Martin Peitz & Dongsoo Shin, 2013. "Upstream Market Power and Wasteful Retailers," Scandinavian Journal of Economics, Wiley Blackwell, vol. 115(1), pages 234-253, January.
    3. Lømo, Teis Lunde, 2015. "Risk sharing mitigates opportunism in vertical contracting," Working Papers in Economics 10/15, University of Bergen, Department of Economics.
    4. Costin Lianu & Irina Gabriela Radulescu & Simona Corina Dobre Gudei & Cosmin Lianu & Veronica Mindrescu, 2022. "Cohesion Forces Determinants in Cluster Development: A Study Case for Romania," Sustainability, MDPI, vol. 14(6), pages 1-12, March.
    5. Tom Murphy & Greg Walker & John Hicks, 1996. "Promoting Efficiency and Competition in Rural Petrol Markets," Agenda - A Journal of Policy Analysis and Reform, Australian National University, College of Business and Economics, School of Economics, vol. 3(4), pages 441-448.
    6. Phan, Phillip H. & Butler, John E. & Lee, Soo H., 1996. "Crossing mother: Entrepreneur-franchisees' attempts to reduce franchisor influence," Journal of Business Venturing, Elsevier, vol. 11(5), pages 379-402, September.

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