1. Franchise Contracts natural monopoly
... the costs of collusion outweigh the costs of competing. The advantage of the incumbent franchisee consists in the information it had collected during the length of the contract and the experience it got from it. This increases the chance of the contract being re-awarded to that firm, which ... a certain extent by including in the contract some obligation of sharing information about for example the relations between the regulators and the firm. The contract length. Demsetz chose in his example a one-year contract. A short-term contract presents the advantages of ensuring certain continui...
- Word Count: 1848
- Approx Pages: 7
- Grade Level: Undergraduate