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Financial Constraints and Moral Hazard: The Case of Franchising

Fan, Ying; Kühn, Kai-Uwe; Lafontaine, Francine - C.E.P.R. Discussion Papers - 2013

decisions and growth of principals, in the context of franchising. We find that a 30 percent decrease in average … collateralizable housing wealth in a region delays chains' entry into franchising by 0.28 years on average, 9 percent of the average …

Persistent link: https://www.econbiz.de/10011084668

Sabotage in Tournaments: Making the Beautiful Game a Bit Less Beautiful

Garicano, Luis; Palacios-Huerta, Ignacio - C.E.P.R. Discussion Papers - 2005

obtain evidence on the effect of stronger incentives on productive and destructive effort. Using as control the behavior of … the same teams in a competition that experienced no changes in incentives, we provide differences-in-differences estimates …, and that indeed attendance suffered as a result of the incentive change. Thus, teams responded to stronger incentives, but …

Persistent link: https://www.econbiz.de/10005114301

Moral Hazard and Capital Structure Dynamics

Dewatripont, Mathias; Legros, Patrick; Matthews, Steven A - C.E.P.R. Discussion Papers - 2002

We base a contracting theory for a start-up firm on an agency model with observable but nonverifiable effort, and … of who has the renegotiating bargaining power, debt and convertible debt maximize the entrepreneur's incentives to exert …

Persistent link: https://www.econbiz.de/10005498043

Reputation-Based Pricing and Price Improvements in Dealership Markets

Desgranges, Gabriel; Foucault, Thierry - C.E.P.R. Discussion Papers - 2002

In many security markets, dealers trade with their regular clients at a discount relative to prevailing bid and ask quotes. In this article we provide an explanation to this phenomenon. We consider a dealer and an investor engaged in a long-term relationship. The dealer assigns a reputational...

Persistent link: https://www.econbiz.de/10005656185

Umbrella Branding and External Certification

Hakenes, Hendrik; Peitz, Martin - C.E.P.R. Discussion Papers - 2007

In a market environment with random detection of product quality, a firm can employ umbrella branding as a strategy to convince consumers of the high quality of its products. Alternatively, a firm can rely on external certification of the quality of one or both of its products. We characterize...

Persistent link: https://www.econbiz.de/10005661499

Dynamic Adverse Selection and Debt

Chemla, Gilles; Faure-Grimaud, Antoine - C.E.P.R. Discussion Papers - 1998

In many long-term relationships, parties may be reluctant to reveal their private information in order to benefit from their informational advantage in the future. We point out that the strategic use of debt by an uninformed party induces another party to reveal private information. Our...

Persistent link: https://www.econbiz.de/10005661720

Takeovers and the Dynamics of Information Flows

Chemla, Gilles - C.E.P.R. Discussion Papers - 2003

This Paper analyses the effect of a possible takeover on information flows and on the terms of trade in business relationships. We consider a long-term relationship between a firm and a privately-informed stakeholder, a buyer for example. In our model, takeovers both increase the surplus from...

Persistent link: https://www.econbiz.de/10005662138

The Theory of Human Capital Revisited: On the Interaction of General and Specific Investments

Kessler, Anke; Lülfesmann, Christoph - C.E.P.R. Discussion Papers - 2000

Human capital theory distinguishes between training in general-usage and firm-specific skills. In his seminal work … reconsiders Becker's theory. We show that there exists an incentive complementarity between employer-sponsored general and …

Persistent link: https://www.econbiz.de/10005666647

Who Should Pay for Certification?

Stahl, Konrad; Strausz, Roland - C.E.P.R. Discussion Papers - 2011

Who does, and who should initiate costly certification by a third party under asymmetric quality information, the buyer or the seller? Our answer --- the seller --- follows from a non--trivial analysis revealing a clear intuition. Buyer--induced certification acts as an inspection device, whence...

Persistent link: https://www.econbiz.de/10008854541

Playing it Safe with Low Conditional Fees versus Being Insured by High Contingent Fees

Emons, Winand - C.E.P.R. Discussion Papers - 2005

Under contingent fees the attorney gets a share of the judgement; under conditional fees they get an upscale premium if the case is won, which is, however, unrelated to the adjudicated amount. We compare conditional and contingent fees in a framework where lawyers choose between a safe and a...

Persistent link: https://www.econbiz.de/10005661624