Andrea Shepard

Contractual Form, Retail Price, and Asset Characteristics in Gasoline Retailing

Predictions from a principal-agent analysis of the manufacturer-retailer relationship are tested using microdata on contractual form, retail outlet characteristics, and retail prices for gasoline stations in eastern Massachusetts. The empirical results are consistent with upstream firms choosing contracts with strong incentives but less direct control when outlet characteristics make unobservable effort by downstream agents important. Manufacturers trade off incentive power for more direct control when observable effort is relatively more important. There is some evidence that the retail prices of some gasoline products are lower when the upstream firm is allowed to control the retail price directly.

Licensing to Enhance Demand for New Technologies

This article presents a model in which licensing competitors expands demand for a new proprietary product and, therefore, may be a profit-maximizing strategy for the licensor even when licensing increases industry cost. In the model buyers care about price and quality, sellers can contract on price but not on quality, and a single supplier has monopoly power. Licensing induces quality competition and allows the supplying firms to make a quality commitment that would not be credible for a single firm. As a result, licensing increases industry demand and may generate an increase in industry revenue sufficient to offset any increase in industry cost. Some of the characteristics of the model are informed by observations in the semiconductor industry.

Regulatory Constraints on CEO Compensation

No abstract is available for this paper.