We study optimal contracting for innovation projects involving initial exploration followed by exploitation upon success, integrating the experimentation literature with dynamic corporate finance. The shape of the exploitation payoff frontier — not just its level — determines the optimal contract...

This paper derives necessary and sufficient conditions under which the firstorder characterization of Holmström (1979) robustly produces affine solutions: a risk-neutral principal, an agent with logarithmic utility, and output whose distribution depends on effort through a one-parameter exponential family with...

Using a general equilibrium model in which brown (polluting) and green (clean-energy) firms compete and seek financing from banks, non-banks, or the capital market, we examine the effects of higher capital requirements on brown bank loans designed to discourage such...

Economies committed to environmental goals, such as mitigating global warming, face the challenge that pollution and emissions largely originate from activities in foreign countries. While governments may attempt to tax domestic firms’ sourcing of inputs from brown international firms, such...

Using a backward stochastic differential equation (BSDE) framework, we examine the principal-agent problem in a finite-horizon continuous-time setting where the agent’s effort is a continuous choice, and the principal can impose non-pecuniary punishments. We show that the agent’s optimal incentive...

I develop a model to compare the effects of moral hazard and imperfect competition in intermediary asset pricing, motivated by empirical evidence from rich trade-level data in Canadian stock markets. Intermediaries invest in multiple risky assets on behalf of their...