A woman wants to present a friend with a gift and, as an inside joke, wants to
Question:
A woman wants to present a friend with a gift and, as an inside joke, wants to present it inside an empty red-
and-white-striped barrel of Kentucky Fried Chicken.
She tries to buy the empty carton from a fast food chain that sells Kentucky Fried Chicken and is told that it costs $10! The barrel full of chicken costs $10.99.
The reason is that the corporate headquarters keeps its inventory on the amount of chicken sold by the number of cardboard containers sold. To ensure an accurate count, the parent firm may have required the franchisees to purchase cartons only from it. Should society bar the franchisor from requiring such purchases by franchisees? Why does the franchisor want to use this method? How can it try to get around this restriction?
Step by Step Answer:
Modern Industrial Organization
ISBN: 9780321011459
3rd Edition
Authors: Dennis W. Carlton, Jeffrey M. Perloff