TY  - JOUR
AU  - Lafontaine,Francine
AU  - Slade,Margaret E.
TI  - Incentive Contracting and the Franchise Decision
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 6544
PY  - 1998
Y2  - May 1998
UR  - http://www.nber.org/papers/w6544
L1  - http://www.nber.org/papers/w6544.pdf
N1  - Author contact info:
Francine Lafontaine
Ross School of Business
University of Michigan
701 Tappan Street
Ann Arbor, MI  48109
Tel: 734/647-4915
Fax: 734/936-0279
E-Mail: LAF@UMICH.EDU

Margaret Slade
Department of Economics
The University of British Columbia
Vancouver, BC, V6T 1Z1
Canada 
E-Mail: mslade@interchange.ubc.ca
AB  - We examine theoretical predictions and econometric evidence concerning franchise contracting and sales-force compensation and suggest a number of factors that ought to influence the contracts that are written between principles and agents.  For each factor, we construct the simplest theoretical model that is capable of capturing what we feel to be its essence.  The comparative statics from the theoretical exercise are then used to organize our discussion of the empirical evidence, where the evidence is taken from published studies that have attempted to assess each factor's effect on the power of agent incentives.  We also discuss theoretical issues and empirical results pertaining to a few topics that have been addressed in the literature but that do not fit easily into our simple modeling framework.  A surprising finding of our survey of retail contracting under exclusive marks is the robust nature of the evidence: although researchers assess different industries over different time periods using a number of proxies for a given factor, their empirical findings are usually consistent with one another.
ER  -