Moral hazard in risk-sharing agreements often occurs when an agent's actions cannot be observed directly. We consider the case in which there is some observable measure of the agent's performance that varies continuously with the agent's effort. We analyze contracts that allow for lump-sum bonus...

Salant's (1976) model of cartelized resource markets with competitive fringe producers predicts an evolution of prices that lies between the Hotelling predictions for monopoly and competition. The price trajectory Salant derives is the best the cartel can enforce against competitive behavior....