Strategy & Business Economics Workshop - Andrei Hagiu - CANCELLED
Thu, 04/20/2017 - 4:15pm
333 Sage Hall
We study how much revenue a principal (e.g. a manufacturer) should extract from an agent (e.g. a retailer) and how much control it should grant the agent over decisions that it can monitor (e.g. the retailer's price or the level of local advertising). This provides a new theory of resale price maintenance, explaining when price ceilings or price floors should be used. It also explains why the frequently observed practice of granting agents control over costly decisions, subject to minimum requirements, is oftentimes optimal. Our analysis applies to the contracting choices facing franchisors, manufacturers, shopping malls, online platforms, and movie studios, among other examples.
Event Categories: Strategy & Business Economics