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The economics of franchising

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  • Patrick Rey

    (INSEE Paris)

Abstract

The academic debate about the motivations for franchising and its impact on economic welfare is quite passionate. Roughly speaking, on one side markets are asserted to be competitive, so that new business practices can merge only if they improve economic efficiency; businessmen "know their business" better than economists or regulators do, and the best possible regulatory policy is no regulation at all. On the other side, it is advised to rule out any kind of arrangement which may restrict one party's freedom of trade - which is the case of practically any provision in a franchise contract. The controversy reflects the opposition between different schools of economic thought, but it also hinges on divergences in the appreciation of the context and of the horizon of the analysis.

Suggested Citation

  • Patrick Rey, 1991. "The economics of franchising," Working Papers hal-01534411, HAL.
    • Handle: RePEc:hal:wpaper:hal-01534411
    Note: View the original document on HAL open archive server: https://hal.science/hal-01534411
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    Cited by:

    1. Ma, Siyu & Sen, Debapriya & Tauman, Yair, 2022. "Optimal patent licensing: from three to two part tariffs," MPRA Paper 111624, University Library of Munich, Germany.

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