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As a business strategy, should this behavior be legal? What if he pays to unwind his short position and continues to hold the shares he bought?
Why might you expect that disagreements among partners who own a professional sports team will be particularly difficult to resolve?
Why is this sort of behavior evidence of a principal/agent problem between executives and shareholders? Why or why not?
What types of companies are more likely to have boards on which outsiders with experience in other industries are more heavily represented?
Give two reasons for taking this argument seriously, and two reasons for not taking it seriously.
In some ways monitoring is easier in a partnership than a corporation, where shareholders monitor directors. In what ways is monitoring easier?
What are the characteristics of cabs and drivers that would lead to this relatively unusual outcome? Why might taxi companies in other cities own their cars?
How might the age distribution of the workers make the building they choose to build too temporary or too durable? How can a building be too durable?
Show that their total profits from acting individually are less than their profits when each worker pays his predecessor on the line that person's marginal cost
Does it then make sense for people with high abilities to go to small firms? Give some reasons why and some reasons why not.
There are, however, some policies that do this. What sorts of losses do you think they cover? Why these losses and not others?
Here moral hazard is reversed and threatens the insured person. Explain why and give the argument in terms of a principal/agent model.
How its organization change if governmental barriers to trade between countries become less stringent? What if it had started as a geographically-based M-form?
Early in our study of principal-agent relationships we used the example of shareholders. Why is that practice unlikely to generate principal-agent problems?
Why do you expect that pressure by employees to form fragmented departments will be a smaller problem in for-profit corporations than in universities?
How does this increase the value that a franchise agreement is likely to create?
Why do you expect that the owner of the mine-mouth plant is more likely to own its coal supplies than the owner of one located at a greater distance from mines?
Why does the chapter suggest any reasons why the company might have picked now to integrate itself into this type of retailing?
How might a manufacturer try inducing the dealer to set price more in accordance with its wishes?
For what types of movies do you expect that the producer will insist on receiving 60 percent of the revenue rather than 40 percent? Explain.
How do the incentives of the parent and its franchisees differ under a standard revenue-sharing franchise contract?
Why might you expect to see flat royalty payments in home-based franchises but revenue-based royalties in franchisees that operate from commercial buildings?
How does a franchise contract in which the parent company supplies ingredients to a franchise holder reallocate risk between the parties.
One study compared the performance of a single company's franchised and company-owned fast-food outlets. Do these two facts surprise you? Why or why not?
Explain why you might would have expected this increase in vertical integration to happen.