1. Franchise Contracts natural monopoly
... problems, combined with the privatisation trend, have pushed the economists to search an alternative solution to the simple privatisation. The "response- to the natural monopoly problem came from Chicago, as early as 1968, and was developed by Demsetz, Stigler and Posner (1972 for the latter). It consists ... continuity in the industry and a relative safety as the contract can be regularly modified to reduce the probability of moral hazard and adverse selection. The problem of human asset is also bound to the length of the contract. Over the matter of fungibility, it may be difficult ... ...
- Word Count: 1848
- Approx Pages: 7
- Grade Level: Undergraduate