"This dissertation contributes theory and empirical evidence on the determinants of market structure in food services, where establishment-level scale economies are small and market power is diffuse. A central question in industrial organization asks what factors shape the distribution of ownership and profits when firms interact in the market. Theories of firm boundaries analyze the tradeoffs in common versus fragmented ownership. Theories of industry structure study how technology and demand characteristics affect the relative sizes of firms. I present evidence on these issues from a new dataset of establishment-level records from the 1997 Census of Retail Trade. "" Residual Claims and Incentives in Restaurant Chains "" directly examines the relationship between complexity of the production process and assignment of residual claims. In the data, managers with more responsibilities generally have fewer residual claims. Chains with more onsite food preparation and table service more often keep production in-house, employing managers with few residual claims, instead of dispersing ownership to independent franchisees. The same pattern occurs when services vary within a chain. These facts imply that ownership decisions in restaurant chains are not based on simple moral hazard problems. Ownership may work to balance incentives for different activities, as described in multitask principal-agent models such as Holmstrom and Milgrom (1991, 1994). "" Competition and Market Structure in the Food Services Industry: Changes in Firm Size when Market Size Expands "" evaluates cost and strategic considerations by comparing changes in establishment revenues and characteristics with variation in market size. The main result is that establishment-level revenues are greater in larger markets for multi-unit restaurants but not for single-unit restaurants. Greater revenues are generated from increased scale, not productivity. Establishment-level fixed factors and chain operations do not account for variation in restaurant size. Multi-unit firms own more establishments in larger markets. These establishments have the same menu type and different zip code locations. Returns to scale are specific to product type and geographical differentiation matters. "" A Note on Price Markups in Oligopoly Models with Differentiated Products "" shows that the shape of preferences affects whether price competition increases continuously with entry in markets with differentiated products."