can capital scarcity help agency theory explain franchising revisiting the capital scarcity hypothesis we offer a rationale for a link between capital scarcity and franchising predictions respectively based on agency theory and the capital scarcity hypothesis were tested among 91 restaurant chains

why democracies produce efficient results by applying the standard tools of microeconomic analysis i argue that democratic markets work as well as economic markets in particular i show that previous work has greatly exaggerated the existence of principal agent and informational problems in electoral markets and has drawn incorrect conclusions

micro estimates of public spending demand functions and tests of the tiebout and median voter hypotheses responses to questions given to a random sample of michigan households are used to estimate public spending demand functions while income and price elasticities are similar to those obtained from aggregate data positive income elasticities appear to arise because public services are distributed in a prorich manner a relatively small variance in spending demands among urban and suburban communities in metropolitan areas with substantial public service variety suggests that the tiebout mechanism works this interpretation is supported by the fact that actual spending conforms substantially to desired levels in urban areas but less so in rural areas with little public sector choice

control techniques and upward flow of information in franchising in distant markets conceptualization and preliminary evidence abstract information exchange between franchisees and franchisors is viewed as instrumental for the attainment of both firm specific and systemic goals within franchise systems our study investigates the issue of control and control techniques employed by franchisors to monitor the performance of their franchisees in distant markers with special focus on the role of information exchange a major assumption underlies our work even though in the language of agency theory franchise contracts attempt to align the incentives of the principal i e franchisor and the agent i e franchisee such alignment is not easy to achieve due to basic conflicts in the parties respective goals for instance while franchisees are primarily interested in achieving short term profits franchisors are more concerned about strengthening the brand equity of their systems a perfect upward flow of information i e from franchisees to franchisors therefore is not necessarily guaranteed this paper introduces and empirically evaluates four hypotheses relating franchisees willingness to provide information to their respective franchisors first it is suggested that franchisees willingness to provide information to their franchisors will be positively related to the incidence of repeat purchases since incentives to free ride are expected to be low at such units in repeat customer industries hence franchisees will have little incentive to hide information second it is argued that the greater the age of relationship between the focal franchisee and franchisor the more secure both parties are likely to feel about the projection of this relationship into the future consequently a positive relationship between the age of the franchise relationship and franchisees willingness to provide information to franchisors is proposed next we suggest that the level of competition faced by franchisees is positively related to franchisees willingness to provide information to their franchisors the latter effect is expected for two reasons foremost such franchisees are likely to see the availability of authentic market information as a necessary tool for their franchisors if franchisors are to provide them with accurate localized advice for combating competitive forces second from an agency theory perspective franchisees have an incentive to conceal information about the external environmental factors only if such information serves to explain franchisees business success in terms of forces other than their effort this would not occur in a competitive environment setting finally multi unit franchisees are hypothesized to more willingly provide information to their franchisors than their single unit counterparts given their lower incentives to free ride and the higher level of security felt in their relationships with their franchisors the empirical verification of our contentions was carried out in two stages first we studied in depth the case of lebanon to develop the initial descriptive materials second and based on the first step we surveyed u s based franchisors with franchisees in the middle east and africa to assess our hypotheses results show that while the extent of competition faced by franchisees was found to be an incentive to provide information to franchisors the age of the relationship emerged as a disincentive to sharing information with the franchisors

estimation of the demand for local public education under a kinked budget constraint unlike previous studies on the demand for local public education this paper applies a minimum likelihood technique developed for a kinked budget constraint to the case of wisconsin school districts and carries out simulations the results indicate that 1 the bias in estimation under standard econometric techniques is substantial 2 the so called flypaper effect indeed exists and 3 the impacts of grants on expenditures and wealth neutrality are different from those obtained by previous studies copyright 1990 by mit press

certification and access to export markets adoption and return on investment of organic certified pineapple farming in ghana summary global food markets demand adherence to food standards by farmers in developing countries such as globalgap and organic certifications this paper analyzes the adoption and profitability of certified farming using farm level data of 386 ghanaian small scale pineapple farmers we employ an endogenous switching regression model to examine the adoption and impact of organic certification on the return on investment roi in pineapple farming the empirical results indicate that both organic and globalgap certification achieve a positive roi however organic certified farming yields a significantly higher roi than globalgap certified farmers mainly due to the price premium on the organic market

investments to create bargaining power the case of franchising hybrid organizational forms such as franchise systems join two or more independent parties under a contract the ability of each party to achieve its goals depend upon the relative bargaining power in the relationship established by the contract using transaction cost economics and porter s 1980 characterization of sources of bargaining power this paper argues that the franchisor can make investments in activities such as tapered integration and buyer selection to increase its bargaining power and decrease conflict and litigation in a franchise system specifically tapered integration owning some units while franchising others selecting inexperienced franchisees and employing a long training program are predicted to increase the franchisor s bargaining power and the franchisee s compliance with franchisor standards an empirical analysis of litigation in restaurant franchise systems supports the theoretical hypotheses copyright 2000 john wiley sons ltd

promoting the role of farmer based organizations for value chain integration the tension between a program s targeting and an organization s investment strategy we use new data on 500 farmer based organizations fbos in ghana and regression analysis to reveal determinants of collective investments and the case of the millennium development authority s mida agricultural program in ghana to demonstrate that development programs offering hard incentives may be counterproductive in promoting collective action we show that when a program sets criteria for participation and offers in cash and in kind support to selected fbos it may promote rent seeking and crowd out equity capital formation this is so because fbos may have formed for the sole purpose of benefitting from incentives offered by the program and thus lack an economic justification which is an important condition for progression through the cooperative life cycle further by setting stringent participation criteria the program may end up selecting younger organizations while it is the more consolidated organizations that are able to connect to business development services bds and engage in more offensive collective action

agency theory and franchising some empirical results this article provides an empirical assessment of various agency theoretic explanations for franchising including risk sharing one sided moral hazard and two sided moral hazard the empirical models use proxies for factors such as risk moral hazard and franchisors need for capital to explain both franchisors decisions about the terms of their contracts royalty rates and up front franchise fees and the extent to which they use franchising in this article i exploit several new sources of data on franchising to construct a cross section of 548 franchisors involved in various business activities in the united states in 1986 the data are most consistent with a model based on two sided moral hazard the empirical models are also more successful at explaining the extent to which franchisors choose to franchise stores than at explaining the terms of franchise contracts finally contrary to the predictions of several theoretical models i find that royalty rates and franchise fees are not negatively related

consequences of debt capitalization property ownership and debt versus tax choice public debts capitalize into property prices thus they are a burden to the present generation who owns the devalued property this largely neglected fact has important consequences for the tax versus debt choice property owners suffer more from the debt burden and thus have a stronger preference for tax financing of government spending than tenants as a consequence of the resulting democratic struggle between property owners and tenants higher property ownership rates in a jurisdiction lead to less debt financing we provide empirical support for this hypothesis by analyzing a cross section of the 171 communities in the swiss canton of zurich in the year 2000

linking smallholders to markets determinants and impacts of farmer collective action in kenya summary this article investigates determinants and impacts of cooperative organization using the example of smallholder banana farmers in kenya farmer groups are inclusive of the poor although wealthier households are more likely to join employing propensity score matching we find positive income effects for active group members yet price advantages of collective marketing are small and high value market potentials have not yet been tapped beyond prices farmer groups function as important catalysts for innovation adoption through promoting efficient information flows we discuss the conditions under which collective action is useful and through what mechanisms the potential benefits emerge

costs of control the source of economic rents for mcdonald s franchisees the main purpose of this article is to establish empirically using financial data that there are both ex ante and ex post rents left downstream at mcdonald s we find that the present value of the ex ante rents is around 300k 455k 1982 dollars ex post rents are of course even larger we argue that the ex post rents represent an incentive mechanism that complements the use of profit sharing rights at mcdonald s we also argue that ex ante rents arise here because franchisees wealth constraints prevent the up front extraction of the full present value of the ex post rents finally we note that mcdonald s desire for a particular type of individual to operate its franchises namely owner operators whose livelihoods are tied to the success of their outlets increases the likelihood that downstream operators face liquidity constraints this in turn contributes to the need for mcdonald s to leave ex ante rents downstream

distributional effects of agricultural cooperatives in china exclusion of smallholders and potential gains on participation abstract this paper examines the treatment effects of the agricultural cooperative and publicly funded extension services on individual household economy using data collected by the author from watermelon producing farm households in rural nanjing the cooperative addressed in this study restricts the participation of small scale farmers implying that selection into the program must be taken into consideration for an accurate assessment of the treatment effect the econometric analysis revealed that government extension services have a modest effect on farm income in contrast the treatment effect of the agricultural cooperative is robust and substantially large accounting for nearly 70 of the pre matching difference this suggests that the agricultural cooperative system is an important avenue for farmers to improve their economic status the treatment effect of the agricultural cooperative is highly heterogeneous the economic benefits arising from the cooperative are significant only for small scale farms we can argue that a coexistence of smallholder exclusion and the treatment effect in favor of small scale farms poses serious challenges to pro poor agricultural growth in china

a problem with observational equivalence disentangling the renter illusion hypothesis the renter illusion hypothesis argues that renters are more likely to support local public expenditures than homeowners because of a misperception about the actual costs and benefits they face numerous empirical studies have produced mixed results which are difficult to interpret because of the lack of micro foundations for the renter illusion hypothesis this paper helps fill that gap by introducing in a theoretical model the concept of renter illusion behaviour which can be seen as a rational behaviour in the presence of cognitive anomalies i e behavioural or bounded rationality and asymmetric information the resulting theoretical framework can be used to interpret and support a large share of micro and macro econometric findings in the previous empirical literature on renter illusion

survival patterns among newcomers to franchising abstract this study examines survival patterns among franchisee and nonfranchise small firms and establishments that entered business during 1986 and 1987 aspiring entrepreneurs purchasing franchises choose this path to small business entry in part because they expect to improve their chances of survival during the turbulent early years of operation evidence to date has been mixed some studies conclude that franchising is a low risk route to small business ownership while others suggest that independent start ups are more likely to remain in operation than franchises this study utilizes two distinct methodological approaches to investigate franchisee survival patterns the first approach demonstrates that franchise units have better survival prospects than independents and the second approach demonstrates that young firms formed without the benefit of a franchisor parent are more likely to remain in operation than franchised start ups reconciliation of these seemingly inconsistent findings is explored survival measurement is heavily influenced by the unit of analysis in franchising firm specific data show different patterns than establishment specific data when young franchise units are tracked through time analysis of establishments owned by corporations is undertaken for restaurants opened nationwide in 1986 and 1987 using census bureau data describing corporate owned restaurant establishments that reported payroll to the irs in 1987 52 088 young establishments were identified 22 5 were franchises comparison of the franchisee and independent restaurant units indicated that independents were more likely to cease operations by 1988 than franchises the fact that franchisee establishments had a better survival track record than independent restaurants does not however demonstrate that aspiring entrepreneurs improve their survival prospects by purchasing a franchise in fact 84 of the new franchise establishments under consideration were units of multi establishment corporations and few of these corporate parents were new businesses envision a corporation in operation for 15 years that owns 20 mcdonalds restaurants in 1987 they opened their twenty first unit the findings of this study indicate that this twenty first unit has excellent survival prospects more so than either an independent start up or a franchisee opening a restaurant for the first time new franchised restaurant units overall may be a safe investment although simultaneously the newcomer opening a franchise may face a high risk situation the analysis then shifts from establishments owned by franchisees to young firms not establishments started in 1986 and 1987 as proprietorships partnerships or s corporations among these young firms franchisees are found to have lower survival rates than independent start ups and these differences persist when various firm and owner traits are controlled for statistically retailing is found to be a particularly difficult field for young franchised firms risk of firm closure is high and mean profits are negative the most common route into retailing entailed purchasing an operating franchise unit from its previous owner that is an ongoing franchise over 53 of the young franchised retailing firms started in 1986 and 1987 were ongoing operations by 1991 only 52 4 of these firms were still operating with the owner of record present in 1987 the findings of this study indicate on balance that purchase of a franchise is unlikely to reduce the risks facing a new business start up this does not imply that the multi establishment franchisee adding another new franchise unit to its existing chain of operations faces a high risk situation rather the high risk facing the franchisee newcomer is partially rooted in the fact that so many of the newly opened units in mature franchising niches are owned by multi unit franchisees that have greater experience and resources than newcomers who are attempting to enter the industry

the effect of organizational form on quality the case of franchising abstract the organizational form of franchising has been shown to yield higher profits and faster growth through reducing agency costs why then does anyone not franchise in this paper i argue that the diffuse residual claims of the franchise system reduce overall system quality and that this problem is inherent in the nature of franchising the theory is tested by examining evidence from both the restaurant and the hotel industries including chains that franchise and ones that own all of their units in both industries quality is negatively related to the percent franchising in the chain controlling for size growth in units monitoring costs market segment ownership structure multi chain operation and price the results suggest that the franchise contract increases free riding and decreases quality in decentralized service chains and that quality is not contractible in this setting

agroindustrialization through institutional innovation transaction costs cooperatives and milk market development in the east african highlands abstract some small holders are able to generate reliable and substantial income flows through small scale dairy production for the local market for others a set of unique transaction costs hinders participation cooperative selling institutions are potential catalysts for mitigating these costs stimulating entry into the market and promoting growth in rural communities trends in cooperative organization in east african dairy are evaluated empirical work focuses on alternative techniques for effecting participation among a representative sample of peri urban milk producers in the ethiopian highlands the variables considered are a modern production practice cross bred cow use a traditional production practice indigenous cow use three intellectual capital forming variables experience education and extension and the provision of infrastructure as measured by time to transport milk to market a tobit analysis of marketable surplus generates precise estimates of non participants distances to market and their reservation levels of the covariates measures of the inputs necessary to sustain and enhance the market policy implications focus on the availability of cross bred stock and the level of market infrastructure both of which have marked effects on participation the velocity of transactions in the local community and inevitably the social returns to agroindustrialization

the productivity and income effects of adoption of improved soybean varieties and agronomic practices in malawi abstract soybean constitutes an important component of the maize based smallholder cropping systems in malawi and holds considerable potential for countering soil fertility decline enhancing household food and nutrition security and raising rural incomes a number of yield enhancing improved soybean varieties and agronomic practices isvaps have been developed and disseminated in malawi but there is limited evidence on the adoption and impacts of these technologies this paper assesses the productivity and income effects of adopting isvaps using plot level data collected from a nationally representative sample of 1237 soybean growing households in malawi our results show that over a third of the sampled households have adopted isvaps furthermore results from a stochastic dominance analysis showed that soybean yields and net crop incomes for adopters are significantly higher than those of non adopters over the entire probability distribution of isvaps adoption endogenous switching regression model results further demonstrated that adoption of isvaps is associated with an average of 61 yield gain and 53 income gain for adopters overall the results point to the need for further scaling of isvaps for greater adoption and impact on the livelihoods of smallholder farmers in malawi

fiscal illusion at the local level empirical evidence for the flemish municipalities fiscal illusion refers to a systematically biased perception of fiscal parameters due to demand side error ignorance or supply side abusive behaviour as such it is a component of a more general tax choice framework

improving channel coordination through franchising in this paper we explore the role of franchising arrangements in improving coordination between channel members in particular we focus on two elements of the franchising contract namely the royalty structure and the monitoring technology we begin with a simple analysis where a manufacturer distributes its product through a retailer and the retail demand is affected by the retail price and the service provided by the retailer in this context we show that neither royalty payments nor monitoring are needed for full coordination we then extend the model to allow for free riding by franchisees and show that although monitoring helps affect the behavior of the franchisees royalty payments are still unnecessary to coordinate the activities of the franchisor and the franchisees finally we show that in environments where factors affecting retail sales are controlled by both the franchisor and the franchisee royalty payments provide the necessary incentives for the franchisor while monitoring systems are used to ensure that franchisees also behave in the best interest of the channel our general results are found to be consistent with those in brickley and dark 1987 and norton 1988 who conclude that franchising is affected by principal agent problems our theory finds special support in the work of lafontaine 1988 where it is concluded that the incidence of franchising is related to cost of monitoring and the importance of franchisor investments

incentive conflicts and contractual restraints evidence from franchising abstract this study uses agency theory to develop testable implications about three provisions commonly observed in franchise contracts 1 restrictions on passive ownership 2 area development plans and 3 mandatory advertising expenditures the primary hypothesis is that these provisions are most likely when there are significant externalities among the units within the franchise system the evidence based on a large sample of franchise contracts is generally consistent with this hypothesis the evidence also suggests that these incentive instruments are complements in contrast to the theory most of the results do not support the hypothesis that the percentage of company owned units is related to externalities within the system franchisee risk aversion and or wealth constraints appear more important while the study focuses on franchising the results provide insights into related provisions in other contracts

tests of institutional versus non institutional models of local public expenditure determination are institutional or non institutional factors more important determinants of local public expenditure decisions employing data that allows us to directly identify the entire distribution of voter expenditure demands we estimate models of deviations of actual expenditures from the expenditure demand of defensible benchmarks namely the median voter s expenditure demand and the mean of voters expenditure demands three competing paradigms are employed to specify these models namely a non institutional model the reform government movement s explanation of how institutions affect local government decisions and a transactions cost model of this same phenomenon predictions from these three competing models differ in many respects comparisons of results from estimating models of expenditure deviations are found to be generally more consistent with the non institutional model than with either of the two institutional models these results suggest that a competitive local public service market helps limit the ability of governments to tax and spend in excess of the demands of the median or mean voter

adoption of improved wheat varieties and impacts on household food security in ethiopia this article evaluates the impact of the adoption of improved wheat varieties on food security using a recent nationally representative dataset of over 2000 farm households in ethiopia we adopted endogenous switching regression treatment effects complemented with a binary propensity score matching methodology to test robustness and reduced selection bias stemming from both observed and unobserved characteristics we expand this further with the generalized propensity score gps approach to evaluate the effects of continuous treatment on the response of the outcome variables we find a consistent result across models indicating that adoption increases food security and farm households that did adopt would also have benefited significantly had they adopted new varieties this study supports the need for vital investments in agricultural research for major food staples widely consumed by the poor and efforts to improve access to modern varieties and services policies that enhance diffusion and adoption of modern wheat varieties should be central to food security strategies in ethiopia

multi unit franchising growth and management issues abstract entrepreneurs in a number of retailing sectors have eschewed the creation of company owned chains and have embraced franchising as a preferred method for growing their businesses there have been two leading reasons proposed for this preference first that franchisees provide the financial capital necessary for expansion and second that franchisees manage the outlets better than company employees would if the unit were company owned interestingly although many entrepreneur franchisors confirm the relevance of the capital acquisition argument in their decision making theoretical analysis has discounted its importance instead researchers have focused on the incentives of employee store managers to misrepresent their ability and their effort as the dominant impetus behind franchising misrepresentation by employees as to ability and effort imposes costs and inefficiencies on the entrepreneur s chain arguing that franchising solves these problems by having the stores managed by persons with claims to the profits these researchers have by and large rejected the capital acquisition argument for franchising in favor of this incentive based rationale within this view multi unit franchising presents a curious anomaly multi unit franchising either through the incremental expansion by the franchisee one unit at a time or through the rights to open multiple units contained in an area development agreement creates a collection of mini chains within the franchise system these mini chains are operated by employee store managers of course they are employees of the franchisee but they are employees nonetheless and as franchise researchers have traditionally argued regarding the entrepreneur s employees they will have incentives to misrepresent their ability and effort moreover multi unit franchising is ubiquitous if multi unit franchising is at odds with the incentive rationale for franchising and it has a positive association with the growth of franchise systems it must be providing the entrepreneur with some other benefit in this study we argue that the benefit it provides is access to capital through a study of fast food franchise systems we demonstrate that the more a chain engages in multi unit franchising i e the greater the proportion of multi unit franchisees it has the faster it grows even faster than franchise systems generally moreover we show that the level of commitment franchisors feel toward continuing to franchise is negatively related to the average number of units per franchisee and negatively related to their ability to obtain financial capital elsewhere in other words although multi unit franchising helps an entrepreneur grow his or her business by providing increased access to capital store level incentive problems get increasingly troublesome as franchisees get more and more units it would appear therefore that capital acquisition is a relevant reason for engaging in franchising after all

the effect of organizational context on entrepreneurial strategies in franchising abstract franchising systems play a vital role in the creation of new jobs and economic development although the role of the franchisor as entrepreneur is generally assumed there has been limited research on the conduct of entrepreneurial activities in the franchising system as a whole in particular researchers and practitioners need to better understand the influences of organizational context on entrepreneurial activities system wide the research reported in this article examines the influences of the organizational context of the franchisor on the entrepreneurial strategies of franchisors their innovation efforts and franchisor support of entrepreneurial activities by franchisees specifically this study examines how the organizational context variables of size age of the franchise its growth rate both absolute and relative and time in franchising affect franchisee perceptions of entrepreneurial strategies of their parent franchisor their innovation efforts and franchisor managerial support for entrepreneurial activity and innovation by the franchisee franchisee perceptions of their parent franchisors entrepreneurial strategies were assessed with respect to four dimensions identified in previous research as central to an entrepreneurial orientation low concern for stability willingness to take risks aggressiveness in competition and proactiveness in seeking new opportunities innovation by franchisors was measured with respect to introduction of new products and techniques drawing on research that emphasizes the importance of instituting special organizational devices and rewards and recognition systems for promoting entrepreneurial activity franchisor support for franchisee entrepreneurial activity and innovation e g the development of new products and services new techniques to improve customer service was measured by the importance franchisees assigned to the use of a franchise council the recognition of new ideas at the annual meeting of the franchise system and the presence at franchisor headquarters of a champion for innovation consistent with other studies examining the influence of organizational context it was hypothesized that organizational size and age would be negatively related to franchisee assessments of entrepreneurial strategies the introduction of new products and techniques and franchisor managerial support for franchisee entrepreneurial activity and innovation in contrast rapid growth was hypothesized to be positively associated with entrepreneurial strategies and support for franchisee innovation no hypotheses were proposed with respect to time in franchising results of the study showed as hypothesized that franchisor size was associated with a concern for stability and strategies that were risk averse cooperative and reactive rather than proactive however size was positively associated with the frequent introduction of new products and also positively related to franchisor support for franchisee innovation contrary to expectations age was positively associated with entrepreneurial strategies including a low concern for stability and an aggressive style of competition in addition age was positively associated with the introduction of both new products and new techniques relative growth rather than an absolute rate of growth was associated with all of the entrepreneurial strategies except risk taking as well as with the frequent introduction of new products although no hypotheses were proposed for time in franchising the findings show that it is associated with a greater concern for stability as well as the infrequent introduction of new products and techniques the findings from this study suggest that franchisors need to institute measures to counteract the potentially deleterious influences of franchise system size on the entrepreneurial orientation within their franchising systems it also suggests the resources of a large organization need to be combined with the flexibility of smaller units for competitive advantage entrepreneurial activity by franchisors and franchisees implies a partnership in adapting to the environment and can provide a competitive advantage the challenge for franchisors will be managing new ideas from the field and adapting to a competitive environment while at the same time preserving the integrity of the franchising system

property value capitalization and municipal open space referenda this paper first develops a theory of demand for land conservation in the presence of price effects due to both amenity creation and housing supply restriction three hypotheses designed to distinguish demand for amenities from homeowner rent seeking are based upon 1 renters 2 the quality of another locally provided good schools and 3 spatial autocorrelation of funding across municipalities econometric results suggest an observable degree of demand for open space measures is nonenvironmental in motivation efficiency and policy implications are discussed along with a recommendation for benefit cost analysis capable of separating nonrival amenities from other interests to certify open space measures jel h41 q24

an empirical look at franchising as an organizational form franchise contracts are identified as a hybrid form of economic organization motives for the dominance of franchise arrangements are identified by examining the theoretical literature on franchising and related literatures on the theory of the firm firm growth managerial and employee selection a nd brand name capital empirical tests are performed on the incidence of franchise contracts across states for three industries in which f ranchising is prominent and data are readily available the results s uggest that both principal agent incentives and informational incenti ves favor the use of franchise arrangements copyright 1988 by the university of chicago

profits from participation in high value agriculture evidence of heterogeneous benefits in contract farming schemes in southern india abstract this paper assesses the variable impact of participation in high value agriculture through contract farming arrangements in southern india using survey data for 474 farmers in four commodity sectors gherkins papaya marigold and broiler an endogenous switching model is used to estimate net profits from participation findings suggest that average treatments effect vary widely across contract commodities papaya and broiler contracting offer clear net gains for participants whereas marigold contracting leaves participants worse off for gherkins while contracting holds net gains for participating farmers overall this is true of contracts with some firms but not others the standard deviations of point estimates of treatment effects are quite large indicating variability in profit gains even within the same commodity sectors thus notwithstanding the sign of average treatment effects contract farming arrangements have diverse impacts on income for individual farmers and these could have implications for sustained participation of farmers in high value agriculture

the choice of municipal government structure and public expenditures numerous empirical studies have attempted to measure the effect of varying government structures on public expenditures i argue that these prior may have produced biased estimates as they are predicated on the assumption that government structures are exogenous

disentangling the demand function from the production function for local public services the case of public safety abstract in this paper we develop a theoretical framework and an econometric model which allow us to separate the effect of income and other socioeconomic variables on the demand for publicly provided goods from their effect on the price of those goods we apply our approach in a study of expenditures for police protection in a cross section of 73 u s cities and counties our results suggest that studies of public expenditures which fail to incorporate community characteristics in production and cost functions can yield very misleading results

crossing mother entrepreneur franchisees attempts to reduce franchisor influence abstract contractual terms guide many entrepreneur franchisees actions with the franchisor however it is impossible for franchisors to completely specify all future actions they compensate by continually attempting to influence franchisees using what franchisees perceive as suasion in their ongoing interactions we develop a theoretical framework for understanding the informal interaction dynamics between franchisors and franchisees most franchise arrangements include the payment of royalties based on sales this encourages a growth oriented strategy usually appropriate for the franchisees during the initial stages of their operations whereas a franchising strategy can reduce entreprenerial risk for franchisees it does not eliminate it thus as sales of the franchisees increase profit oriented strategies will be favored because they represent the payoffs that accrue to continuing entrepreneurial effort and risk taking these strategies may be in opposition to franchisors sales orientation when market conditions do not allow continual growth without margin penalties a research model is developed depicting the relationship between franchisees strategies and performance and the moderating effect that contractual goals and franchisees perception of franchisors attempts at suasion have on this relationship a set of research hypotheses was then empirically tested using a large sample of franchisees from the commercial truck retailing industry the results indicate that sales growth and profit growth goals are not always congruent balancing the goals of the franchisor and franchisee did not appear to be a popular option either one or the other was emphasized more importantly the results indicate that when franchisees perceive attempts by franchisors to use suasion lower levels of profits result but there is no corresponding increase in the level of sales in the long term franchisors are likely to determine that current contractual arrangements are not protecting their longer term interests thus they will be expected to attempt to modify franchise contracts in ways that force franchisees to implement sales gain strategies this will require that entrepreneur franchisees anticipate future events more carefully at the time they are examining the original franchise contract because most entrepreneurs are concerned with immediate survival at the start up stage this makes examination of the contract less likely to happen the franchise option is attractive because it reduces such risks we recommend that entrepreneurs write ex ante contingent claims contracts that ensure a gradual reduction of franchisor influence although this would assume a power or knowledge balance that favors the franchisees which is unlikely during the start up phase it will change over time as franchisees gain a better understanding of the local competitive dynamics thus it may well serve the franchisees to take a defensive posture or push a royalty arrangement that decreases the emphasis on sales over time this is most likely to be effective where the entrepreneur is considering several competing franchises at the time of the signing of the contract finally we recommend that entrepreneur franchisees should not assume that the expert advice offered by their franchisor is always in their best interests although technical advice is more likely to be unbiased and should be fully exploited as this is what makes the franchise valuable strategic advice or that which relates to goal setting may well be colored by the financial interests of the franchisor franchisors are unlikely to consider the possibility that franchisees would be better served by formulating their own strategies nor are they likely to consider that the franchise network would be better off in the longer term by the collective impact associated with numerous franchisees independently formulating their own strategies in short although we do not suggest that franchisees should always assume that crossing mother is the best response to all perceived franchisor suasion efforts they should carefully examine all strategic advice

farmer organization collective action and market access in meso america abstract farmer organization and collective action are often seen as key factors in enhancing farmers access to markets often too little attention is directed at a the most appropriate types of organization b whether organization makes less or more sense in the case of producers of an undifferentiated commodity or a higher value product c whether the public or private sector is best placed to support farmer organizations and d the conditions necessary for ensuring their economic viability research in mexico and central america explored these issues for commodity maize and high value vegetables respectively the benefits of farmer organization are more evident in the vegetable sector characterized by high transaction costs associated with market access however horticultural farmer organizations in honduras and el salvador include less than 5 of total horticultural producers this is possibly due to farmer organizations limited business skills and non replicable organizational models there is less incentive for maize farmers to organize to access output markets as the transaction costs are relatively low the benefits of maize farmer organization are clearer when it comes to accessing inputs such as credit seed and fertilizer farmer organization is a critical factor in making markets work for the poor but the role and timing of public and private investment in these organizations is poorly understood

property taxation and local public spending the renter effect the point of departure for this study is the pervasive finding that other things equal local jurisdictions tend to spend more on local services the larger the fraction of renters among their residents this paper seeks to determine the approximate magnitude of this renter effect by posing the question how much smaller would local public budgets be if all residents were home owners making use of two quite different approaches the paper finds a typical renter effect on local public expenditure on the order of ten percent this finding suggests that we might do well to reform the administration of the property tax so that changes in property tax liabilities on rental dwellings are directly and visibly transformed into changes of monthly rental payments

the choice of organizational form the case of franchising abstract we examine companies that franchise some units and centrally operate own others the agency problems confronting these two organizational forms are analyzed testable hypotheses are developed the empirical results support the notion that owning versus franchising reflects a trade off among agency related problems the cost of monitoring store managers appears to be especially important in the own franchise decision the level of repeat business and initial investment requirements per unit also appear to be important

impact of cooperatives on smallholders commercialization behavior evidence from ethiopia this article examines the impact of marketing cooperatives on smallholder commercialization of cereals using detailed household data in rural ethiopia we use the strong government role in promoting the establishment of cooperatives to justify the use of propensity score matching to compare households that are cooperative members to similar households in comparable areas without cooperatives the analysis reveals that although cooperatives obtain higher prices for their members they are not associated with a significant increase in the overall share of cereal production sold commercially by their members however these average results hide considerable heterogeneity across households in particular we find that smaller farmers tend to reduce their marketed output as a result of higher prices whereas the opposite is true for larger farmers

does cooperative membership improve household welfare evidence from apple farmers in china this paper examines the impact of cooperative membership on farm performance indicators such as apple yields net returns and household income using cross sectional data from a survey of farmers in china an endogenous switching regression model that accounts for selection bias is employed in the analysis the empirical results reveal that cooperative membership exerts a positive and statistically significant impact on apple yields farm net returns and household income a disaggregated analysis also reveals that small scale farms tend to benefit more from cooperatives than medium and large farms

managerial rents and outside recruitment in the coasian firm in the corporation decision making about the use of capital by managers and risk taking by the owners of capital are specialized activities various institutional mechanisms have been analyzed as forces disciplining the opportunistic behavior of management under these conditions we maintain that no single mechanism such as wage revision in the managerial labor market or an internal device that relies on influencing incentives by making executives residual claimants in the firm is sufficient to solve problems of managerial incentives instead the margins of several control devices are extended simultaneously to maximize the value of the firm net of the cost of control in this context we will emphasize one means of managerial control which has not been fully analyzed to date the impact of outside hiring on the behavior of incumbent managers

the challenge of autonomy and dependence in franchised channels of distribution abstract an enduring challenge for franchise management involves the reconciliation of 1 the franchisor s desire for standardization consistency and control for the preservation of its goodwill and brand equity and 2 the franchisee s quest for autonomy especially because franchises are frequently sold on the platform of be your own boss and have historically attracted would be franchisees with self employment histories and strong streaks of independence and autonomy building on arguments derived from agency theory resource dependence theory the locus of control argument and the countervailing power premise the present study attempts to evaluate 1 the interrelationships between the concepts of autonomy and dependence and 2 the influence of competition success experience and multi unit ownership as determinants of the various autonomy dependence perceptions it is suggested that contrary to the dominant perspective nested in the markets versus hierarchy dichotomy which portrays the sentiments of dependence and autonomy as opposing theoretical variables i e they are envisioned to exist only in high low combinations of these two constructs even their high high and low low combinations can emerge within a franchise setting and that these diverse behavioral settings entail unique management challenges the empirical portion of the study utilizes data drawn from the franchised channel of fastfood restaurants the results support the emergence of all four combinations of dependence and autonomy i e the traditional high low combinations as well as the high high and low low combinations suggesting that behavioral settings of franchises are indeed richer than hitherto imagined it appears that because franchisee franchisor relationships encompass several domains they each feel dependent on the other party in certain domains and simultaneously autonomous in other domains the environmental factor of competition the relationship factor of business success experienced in the franchise system and the structural factor of multi unit ownership emerged as significant predictors of dependence and autonomy notably however the countervailing power argument was not supported by the data the multi unit ownership effects were especially strong and provided a more direct test of the alignment of goals and incentives envisioned by agency theory we conclude by identifying four categories of franchisees with distinct gestalts that franchisors would do well to learn to manage in the spirit of portfolio management

collective action for smallholder market access abstract the opportunity for smallholders to raise their incomes increasingly depends on their ability to compete in the market yet there are many failures in rural markets in developing countries that make it difficult for them to do this understanding how collective action can help address the inefficiencies coordination problems or barriers to market access is particularly important this paper draws on the case studies in this special issue and on other literature to examine the conceptual issues and empirical evidence on the role of collective action institutions in improving market access for the rural poor applying insights from studies of collective action in natural resource management the paper examines what conditions facilitate effective producer organizations for smallholders market access with special attention to the characteristics of user groups institutional arrangements types of products staples perishables and other commodities markets local domestic and international and external environment the paper also identifies policies and interventions that facilitate collective action for market access among smallholders and examines whether the public sector private sector and or civil society is best positioned to provide such interventions

the adoption and impact of soil and water conservation technology an endogenous switching regression application this paper identifies the factors that affect farmers decisions to adopt soil and water conservation technology in africa and how this technology impacts farm yields and net returns this technology is important because it improves efficiency of water use from rainfall a critical issue in water deficient sub saharan africa an analysis of new data from a survey of 342 rice farmers in northern ghana shows that farmers education capital and labor constraints social networks and extension contacts and farm soil conditions mainly determine adoption of field ridging and the adoption of this technology increases rice yields and net returns significantly jel q15 q24

property tax financing renting and the level of local expenditures the renter homeowner dichotomy has been systematically ignored in the local public goods literature the conventional justification for ignoring this dichotomy is that the only difference between the two groups of individuals is an innocuous accounting rule owners pay property taxes directly while renters pay property taxes indirectly via their rental payments to landlords 9 consequently when empirical studies after controlling for income and tastes find renter behavior that is discernably different from that of homeowners the explanation commonly offered is that renters are subject to fiscal illusion i e renters support higher levels of expenditures than homeowners because renters are unaware of the actual property tax burdens they bear 2 the fiscal illusion explanation despite its general acceptance is deficient on both empirical and theoretical grounds empirically the fiscal illusion hypothesis has not and probably cannot be directly tested 3 fiscal illusion is not so much a theory of renter behavior as it is a convenient ad hoc explanation for empirical results that are unexpected from the theory a revised theory of renter behavior cum illusion moreover would lack credibility to argue that even if time and again renters expectations are unfulfilled by experience i e they pay as much for increased services as owners when they expect not to yet renters consistently support higher levels of services would simply be untenable there are alternative possible explanations for renters behavior renters might have stronger preferences for public goods e g they may have a larger number of school age children renters

the economics of franchise contracts as an organizational arrangement the franchise contract lies between anonymous price mediated exchange and centralized intrafirm employment in contrast to conventional market exchange franchise contracts typically impose on franchisees retail quality standards common hours of business price controls and nonlinear payment schedules for example fixed initial royalty fees plus a percentage of gross retail revenues while franchisors typically provide national advertising and training programs monitor and inspect the franchisees performance with varying intensity across industries and hold the residual power to terminate the franchise agreement observations of actual terminations indicate that franchisors sometimes exclude this power franchisors sometimes face persistent queues of potential franchisees in contrast to simple employment contracts franchise agreements provide for sharing of profits through royalties on revenue or output and considerable freedom for independent decisions by local franchisees 1 why do these franchise contracts exist