Franchise fee, competition and economic growth

Vey Wang and Chung-Hui Lai

Economic Modelling, 2011, vol. 28, issue 5, 2090-2099

Abstract: This paper introduces the different kinds of franchise contract bargaining into a macroeconomic model and accordingly researches the relationship between competition and economic growth. In Nash bargaining model/vertical integration we find an inverted-U shaped or a monotonically increasing relationship between the competitive degree of the intermediate goods market and economic growth. In bargaining of the right to manage model/vertical non-integration our result shows an inverted-U shaped or a monotonically decreasing relationship between the competitive degree of the intermediate goods market and economic growth. In addition, there is an overall negative relationship between the competitive degree of the final goods market and economic growth. Especially, our interesting findings that the pricing rule for intermediate goods firm depends not only on market power but also bargaining power are more general. Therefore, we can further explain the firms' vertical control strategy.

Keywords: Competition; Franchise; fee; Royalty; Endogenous; growth; R&D; Bargaining (search for similar items in EconPapers)
Date: 2011
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Citations: View citations in EconPapers (6)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:ecmode:v:28:y:2011:i:5:p:2090-2099

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