Abstract
This study empirically tests transaction cost hypotheses with the use of data on publicly-owned franchised firms. We employ measures of the proportion of company-owned outlets for the degree of integration and brand name capital for the degree of asset specificity. The results suggest that for the sampled firms the degree of asset specificity is positively related to the degree of vertical integration. Additionly, increases in the real interest rate and firm growth rates are found to be positively related with vertical integration, while increases in unanticipated growth and firm experience are negatively related with vertical integration.
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We thank Richard Langlois and Scott Masten for helpful comments on earlier versions of this paper. Michael Everett and Jon Vilasuso provided excellent research assistance. The usual disclaimer applies.
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Minkler, A.P., Park, T.A. Asset specificity and vertical integration in franchising. Rev Ind Organ 9, 409–423 (1994). https://doi.org/10.1007/BF01029514
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DOI: https://doi.org/10.1007/BF01029514