Understanding Plural Forms: The Case of Reps and House Accounts

JOURNAL OF LAW, ECONOMICS, AND ORGANIZATION, Vol 11 No 1, Spring 1995

Posted: 29 Jul 2001

See all articles by Shantanu Dutta

Shantanu Dutta

University of Southern California - Marshall School of Business

Mark E. Bergen

University of Minnesota - Carlson School of Management

Jan B. Heide

Wisconsin School of Business

George John

University of Minnesota - Twin Cities - Carlson School of Management

Abstract

"Plural" distribution systems are often found in industrial markets. Although transaction cost analysis has been successfully applied to understanding decisions about distribution systems, these plural forms have been virtually ignored in extant empirical work. Critics suggest that extant transaction cost models are inadequate to study these systems. We contend that transaction cost reasoning can be readily applied to understanding these systems, and undertake an analysis of a common plural form, namely, the simultaneous use of an independent rep system with a company operated "house account" system. Familiar transaction cost problems like lock-in (the safeguarding problem), and difficulties in evaluating an independent rep's performance (the behavioral uncertainty problem) are posited to lead firms to deploying house accounts to augment an independent rep system. Using data from a survey of independent agents, we provide preliminary evidence for these predictions. We discuss the implications of our findings for theory and practice.

JEL Classification: G30

Suggested Citation

Dutta, Shantanu and Bergen, Mark E. and Heide, Jan B. and John, George, Understanding Plural Forms: The Case of Reps and House Accounts. JOURNAL OF LAW, ECONOMICS, AND ORGANIZATION, Vol 11 No 1, Spring 1995, Available at SSRN: https://ssrn.com/abstract=6350

Shantanu Dutta

University of Southern California - Marshall School of Business ( email )

Hoffman Hall 701
Los Angeles, CA 90089-1427
United States
213-740-5038 (Phone)
213-740-7828 (Fax)

Mark E. Bergen

University of Minnesota - Carlson School of Management ( email )

19th Avenue South
Minneapolis, MN 55455
United States
612-624-1821 (Phone)

Jan B. Heide

Wisconsin School of Business ( email )

Madison, WI 53706
United States

George John (Contact Author)

University of Minnesota - Twin Cities - Carlson School of Management ( email )

321 19th Avenue South
1220 Management and Economics
Minneapolis, MN 55455
United States
612-624-6841 (Phone)
612-626-8328 (Fax)

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