Contractual allocation of decision rights and incentives: The case of automobile distribution

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• dc.contributor.author Arruñada, Benito
• dc.contributor.author Garicano, Luis
• dc.contributor.author Vázquez, Luis
• dc.contributor.other Universitat Pompeu Fabra. Departament d'Economia i Empresa
• dc.date.accessioned 2020-05-25T09:27:09Z
• dc.date.available 2020-05-25T09:27:09Z
• dc.date.issued 1999-10-01
• dc.date.modified 2020-05-25T09:18:20Z
• dc.description.abstract We analyze empirically the allocation of rights and monetary incentives in automobile franchise contracts. These contracts substantially restrict the decision rights of dealers and grant manufacturers extensive contractual completion and enforcement powers, converting the manufacturers, de facto, in a sort of quasi-judiciary instance. Variation in the allocation of decision rights and incentive intensity is explained by the incidence of moral hazard in the relation. In particular, when the cost of dealer moral hazard is higher and the risk of manufacturer opportunism is lower, manufacturers enjoy more discretion in determining the performance required from their dealers and in using mechanisms such as monitoring, termination and monetary incentives to ensure such performance is provided. We also explore the existence of interdependencies between the different elements of the system. and find some complementarities between completion and termination rights, and between monitoring rights and the intensity of incentives.
• dc.format.mimetype application/pdf*
• dc.identifier https://econ-papers.upf.edu/ca/paper.php?id=424
• dc.identifier.citation Journal of Law, Economics and Organization, 17 (1), 2001, 256-283
• dc.identifier.uri http://hdl.handle.net/10230/716
• dc.language.iso eng
• dc.relation.ispartofseries Economics and Business Working Papers Series; 424
• dc.rights L'accés als continguts d'aquest document queda condicionat a l'acceptació de les condicions d'ús establertes per la següent llicència Creative Commons
• dc.rights.accessRights info:eu-repo/semantics/openAccess
• dc.rights.uri http://creativecommons.org/licenses/by-nc-nd/3.0/es/
• dc.subject.keyword franchising
• dc.subject.keyword contracts
• dc.subject.keyword self-enforcement
• dc.subject.keyword incentives
• dc.subject.keyword complementarities
• dc.subject.keyword automobiles
• dc.subject.keyword Business Economics and Industrial Organization
• dc.title Contractual allocation of decision rights and incentives: The case of automobile distribution
• dc.type info:eu-repo/semantics/workingPaper