| Abstract: | The essays that together make up this dissertation investigate how firms choose among several organizational forms, and how demand and competitive conditions affect pricing behavior. The first essay, "Incomplete Contracting and the Choice Between Vertical Integration and Contracting", develops a model of retailer's choice of how to run dispersed local outlets. The model is based on the stylized fact that, whether a firm franchises or integrates, the form of the contract between manager and firm is symmetric. In both cases, the owner bears costs. Working from this assumption, the choice of organizational form is shown to depend on which party has the largest marginal effect on cost. The second essay is an analysis of the demand conditions in the pharmaceutical industry, and development of a retail cost of living index for pharmaceuticals. It is shown that retail prices rise faster than wholesale prices. The final essay analyzes the effects of entry by new firms on the prices of pharmaceuticals. It is shown that, contrary to popular belief, even brand-name products respond to new entry. |
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