The standard ex post type of collusion is a supervisor-agent agreement to misrepresent the outcome of supervision. Under ex ante collusion the agent makes a side transfer to the supervisor, who, in return, stops monitoring the agent's productivity. Extending Tirole's [1986] model of hierarchy to...

This paper explores implications of interactions between concontractibility of quality, multidimensional hidden information, switching costs and the frequency of trade on the terms of contracts in a buyer-seller setup. Optimal contractual arrangements are showm to consist of a sequence of two...