We propose a theory of supervision with endogenous transaction costs. A principle delegates part of his authority to a supervisor who can acquire soft information about an agent's productivity. If the supervisor were risk-neutral, the principal would simply make the better informed supervisor...

A risk averse agent gathers information on productivity shocks and produces accordingly on behalf of his principal. Information gathering is imperfect so that the agent has either complete or no knowledge at all of those shocks. The model allows for moral hazard in information gathering, private...

This Paper analyses the impact of asymmetric information within countries on the pattern of international trade. We append to the standard 2×2 Heckscher-Ohlin model of a small economy a continuum of sectors producing intermediate non-tradable goods. Those goods are produced by monopolies having...