A risk neutral principal hires a risk averse agent to produce quality which is unobservable by the principal but generates a random stream of observable revenues. Unobservable effort and some other input called capital costs are perfect complements in the product at quality. The minimum level of...

We introduce intermediaries into the Brander-Spencer model of strategic trade policy. A key finding is that in regimes involving independent retailers, output competition and linear pricing (and two-part tariffs under certain restrictions), the optimal policy involves an export tax instead of a...