When a firm contracts with a privately informed retailer, vertical restraints may be insufficient to eliminate distortions arising from having to induce truthful reporting. With franchise fee contracts (which are equivalent to any other "quantity forcing" contract), two distortions arise. The...

Negative externalities or 'congestion'costs in the utilization of common resources introduce strategic considerations that tie cost allocation rules to competitiveness in external markets. The equilibrium rule for allocating common costs consists of 'profitability'and 'strategic' components. The...