The author considers a market that consists of two competing franchise systems and focuses attention on franchise agreements that specify the payment of the franchisees as a quantity contingent nonlinear price schedule. At the equilibrium, the schedule of wholesale prices reflects both an...

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...

Forming a common agency in oligopoly may introduce both advantageous and disadvantageous implications on the profits of the firms, if agents have access to private information about their costs. In addition to facilitating better coordination of production and pricing decisions, a common agency...

We evaluate the relationship between insurers (payers) and providers of health care (hospitals) when they each have a nonnegligible share of the market. We focus in particular on their incentives to merge and the existence of equilibria where payers offer preferential treatment to a subset of...

This paper surveys recent work in contract theory that relates to the allocation of tasks among agents within an organization as well as to the effect of product market competition upon optimal contracting and agency costs. Copyright (c) 1997 Massachusetts Institute of Technology.

In the present paper, we relate the extent of job security offered to incumbent managers to the extent of competition among firms in the product market, where the extent of job security is measured by the probability that an incumbent manager continues to be employed by his current firm and the...

In the present study I identify an inherent characteristic of health care markets that may lead to excessive investment by hospitals even when compensated according to a prospective reimbursement rule. It is demonstrated that the stochastic nature of the demand for medical services combined with...