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We study a failure fee contract designed by a price-setting newsvendor retailer under information asymmetry.
The comfort level of a cost plus a fee contract depends on the quality and integrity of the contractor.
We study two subscription-based contracts namely, (i) a lump-sum pay and per-unit fee contract, and, (ii) a revenue sharing and lump-sum pay contract and analyze the strategic decisions of the players in these contracts.
The chief executive, Sanjay Kumar, credited the improvement to the company's shift to a subscription-based revenue model from a one-time license fee contract model.
She declined to pay, but last December an appeals court awarded him the fee called for by the contingency fee contract -- 10percentt of the total, or $140,000.
On comparison of equilibrium values, we find that the collection effort of the remanufacturer under the lump-sum pay and per-unit fee contract is lower than the case of competition (base case), whereas the collection effort is higher under the revenue sharing and lump-sum pay contract (under certain bounds).
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We propose and compare two types of failure fee contracts: a brand-by-brand contract and a uniform contract.
Courts have the inherent authority to review attorney contingent fee contracts in order to prevent unreasonableness.
See Peter Karsten, Enabling the Poor to Have Their Day in Court: The Sanctioning of Contingency Fee Contracts, A History to 1940, 47 DePaul L. Rev. 231 (1998) (discussing, in a particularly scholarly manner, the early history of contingent fee agreements).
It would, however, promote more efficient provision of public services, in much the same way that contingent fee contracts often promote more efficient provision of services in the private sector.
The reason for this is that the majority comes from long-term affiliate fee contracts.
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CEO of Professional Science Editing for Scientists @ prosciediting.com