We generalize the Boadway and Keen (2006) model of adverse selection in a capital market to allow for risk aversion on the part of entrepreneurs. We show that the Boadway and Keen conclusion-that adverse selection leads to excessive investment-does not necessarily hold when entrepreneurs are...

Brazilian data on auto-insurance present an intriguing fact: the coexistence of policies being sold with zero and positive brokerage fees. We extend the Bertrand model of price competition to a dynamic environment in which agents face a .xed cost to switch to a new (unmatched) broker. This...

Ever since Adam Smith, share contracts have been condemned for their lack of incentives. Sharecropping tenants face incentives to undersupply productive inputs since they receive only a fraction of the marginal revenue. The empirical literature reports that lands under sharecropping are indeed...