Miquel, Gerard Padró I; Yared, Pierre - In: The Quarterly Journal of Economics 127 (2012) 2, pp. 947-1015
This article characterizes optimal policy when a government uses indirect control to exert its authority. We develop a dynamic principal-agent model in which a principal (a government) delegates the prevention of a disturbance--such as riots, protests, terrorism, crime, or tax evasion--to an...