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Optimal Pricing of Public Franchises With Imperfectly Correlated Demand Shocks

Marco Buso et al.

Journal of Economics & Management Strategy2025https://doi.org/10.1111/jems.12639article
AJG 2ABDC A
Weight
0.37

Abstract

In a dynamic adverse selection setting with private information about stochastic consumer preferences, we study the pricing of franchise rights when the awarding government body has to balance between revenue collection and consumer welfare. In this environment, we show that optimal pricing requires an appropriate combination of fixed and time‐variable transfers between the parties. Notably, our findings suggest that it might be optimal to occasionally subsidize rather than charge the franchisee when consumers' willingness to pay increases well beyond initial expectations.

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https://doi.org/https://doi.org/10.1111/jems.12639

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@article{marco2025,
  title        = {{Optimal Pricing of Public Franchises With Imperfectly Correlated Demand Shocks}},
  author       = {Marco Buso et al.},
  journal      = {Journal of Economics & Management Strategy},
  year         = {2025},
  doi          = {https://doi.org/https://doi.org/10.1111/jems.12639},
}

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Optimal Pricing of Public Franchises With Imperfectly Correlated Demand Shocks

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Evidence weight

0.37

Balanced mode · F 0.40 / M 0.15 / V 0.05 / R 0.40

F · citation impact0.16 × 0.4 = 0.06
M · momentum0.53 × 0.15 = 0.08
V · venue signal0.50 × 0.05 = 0.03
R · text relevance †0.50 × 0.4 = 0.20

† Text relevance is estimated at 0.50 on the detail page — for your query’s actual relevance score, open this paper from a search result.