Engel, Eduardo; Fischer, Ronald - 2008
,weshowthatacontractthateliminatesallriskfor
thefirm,whilegrantingitnorents,isoptimalinthecaseinwhichoperatingprofitscoverinvest-
ment costs in all states of demand in … the firm and costs that are based on observable variables. These are the profits that are pre-specified in
the initial … marginal costs depend on effort exerted by the investor up front).
Finally, we consider the possibility that the firm can exert …