Independent distributors of soda can free ride on the brand name of the company manufacturing soda.Two solutions to this problem are:
A)creating joint asset ownership and entering into long-term contracts.
B)encouraging open market transactions and distributing production secrets.
C)advertising and granting exclusive territories.
D)encouraging open market transactions and granting exclusive territories.

Question

Quizplus · Accepted Answer

The best solution to the problem of independent distributors free riding on the brand name of the company manufacturing soda is to advertise and grant exclusive territories. This way, the company can control the distribution of its product and ensure that only authorized distributors are using the brand name. Granting exclusive territories can also help minimize competition and ensure a steady revenue stream for both the company and the authorized distributors. Joint asset ownership and long-term contracts may be complicated to set up and may not effectively address the problem of free riding, while open market transactions and distributing production secrets may not be feasible due to confidentiality and intellectual property concerns.

Independent Distributors of Soda Can Free Ride on the Brand