We propose a theory explaining the shape of contracts between local governments and the contractors they hire to run public facilities on their behalf. Governments are privately informed over the quality of the facility and risk-averse while risk-neutral contractors are subject to a moral hazard...

We study the role of two-part transfer schemes as signals of consumer demand from a privately informed franchisor to an uninformed franchisee. Distortions in the wholesale price and the up-front franchise fee offered by the high demand franchisor may possibly separate the different types of...