This paper analyzes the role of ex post producer opportunism on the optimal design of vertical restraints. It considers vertical contracts as starting points of ex post renegotiation. It shows that the alleged room for franchisor opportunism that seems quite important in franchising contracts...

Current theories of the vertical limits to firm size emphasize the consequences of opportunistic behavior by managers. The authors introduce opportunistic wage setting by labor unions and trace the implications for profit and investment in specific assets. Although subcontracting to an...