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| Author: | Lafontaine, F. Slade, M. E. |
| Title: | Retail contracting and costly monitoring: Theory and evidence |
| Journal: | European Economic Review
1996 : APR, VOL. 40:3-5, p. 923-932 |
| Index terms: | LITERATURE CONTRACTS AGENCIES FRANCHISING RETAILING |
| Language: | eng |
| Abstract: | The paper reconciles seemingly conflicting hypotheses and evidence that surface in the principal-agent literature. Especially, the literature dealing with the effect of costly monitoring on retail-organizational form is examined. The principal-agent model of the optimal relationship btw. up- and downstream firms allows the principal to garner two types of imperfect signals of agent effort: sales data and behaviour data. The model yields predictions that are confronted with the econometric evidence, which comes from both franchising and sales-force-compensation literatures. The paper find the evidence to be consistent with the theory . |
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