We examine optimal dynamic incentive contracts when adverse selection and moral hazard problems are present. We find that early success is optimally penalized in the sense that the agent who succeeds early subsequently faces a lower-powered incentive contract. Penalizing success in this manner...

We construct a model of long-term bilateral competition between the supplier of an exhaustible resource and a consuming country capable of producing a perfect substitute for the resource. The technology for producing the substitute is known, and the strategy of the consuming country is to choose...