Incentives for resale price maintenance (RPM) are studied in a wholesaler-retailer relationship in which both firms make a nonprice choice subject to moral hazard. The best attainable contract has vertical externalities in both nonprice choices and the choice of consumers' price if delegated to...

Double moral hazard arises in the principal-agent model when both parties provide a nonverifiable input following contracting. Balanced-budget contracts are generally second best. If the principal's input is public to two agents, which often characterizes franchising, for example, then...