Price Control In Franchised Chains: The Case Of McDonald's Dollar Menu

Itai Ater () and Oren Rigbi ()
Additional contact information
Itai Ater: Tel Aviv University

No 1206, Working Papers from Ben-Gurion University of the Negev, Department of Economics

Abstract: We analyze price patterns at franchised and corporate-owned McDonald's outlets in 1999 and 2006 and find that prices at franchised outlets were higher than those at corporate outlets. The price difference between franchised and corporate outlets decreased between 1999 and 2006 but only for items with close substitutes in the Dollar Menu, which was introduced in 2002. We also find that the price difference between franchised and corporate outlets was higher among outlets located near highways than among non-highway locations. After the Dollar Menu was introduced, this highway - non-highway difference diminished. Our findings suggest that the Dollar Menu improved McDonald's corporation's control over franchisees' prices.

Keywords: Franchising; Free-Riding; Reputation; Advertising; Vertical Restraints (search for similar items in EconPapers)
JEL-codes: K21 L14 L22 L42 M37 (search for similar items in EconPapers)
Pages: 35 pages
Date: 2012
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
http://in.bgu.ac.il/en/humsos/Econ/Workingpapers/1206.pdf (application/pdf)

Related works:
Working Paper: Price Control In Franchised Chains: The Case Of McDonald's Dollar Menu (2007)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:bgu:wpaper:1206

Access Statistics for this paper

More papers in Working Papers from Ben-Gurion University of the Negev, Department of Economics Contact information at EDIRC.
Bibliographic data for series maintained by Aamer Abu-Qarn ().