If shareholders are prone to excessive risk-taking, delegating the project choice to a manager with conflicting interests may reduce the agency cost of debt. The extent to which this delegation is credible, however, depends on the shareholders' ability to commit not to overrule the manager's...

An upstream supplier constrained by downstream competition and the threat of demand-side substitution faces a trade-off between maximizing overall joint-profit and extracting surplus. By inducing more intra-brand competition through lower wholesale prices, the supplier makes it less attractive...

Firms frequently offer refunds, both when physical products are returned and when service contracts are terminated prematurely. We show how refunds act as a "metering device" when consumers learn about their personal valuation while experimenting with the product or service. Our theory predicts...

Manufacturers constantly make decisions that crucially affect product quality, e.g., through procuring high-quality inputs or maintaining high hygienic standards in production. We show fi rst how a high price for its product increases a manufacturer s incentives, so that there is a positive...

I take an efficient contracting approach to answer the question how much "job protection" to offer employees, in particular those at the top of organizations. Given their privileged information or formal authority, senior managers who are not given such protection are likely to take...

The Commission's ongoing evaluation of the HBER and the Horizontal Guidelines has identified as a key topic the consideration of sustainability benefits. With this background, the Commission has posed the following question: When and how can sustainability benefits deriving from an agreement...

The European Commission has published its Draft Horizontal Guidelines (DHG), which include an assessment of “sustainability agreements”. The dedicated paragraphs enlarge the scope for the consideration of sustainability benefits. We review the various ways how such an extended consideration...

Recent changes in national competition laws and enforcement guidelines, including those of the European Commission, increase the scope for considering sustainability benefits in the assessment of horizontal cooperations. Abstracting from (standard) arguments that relate to cost sharing,...

An upstream supplier that is constrained both by downstream competition and the threat of demand-side substitution faces a tradeoff between maximizing joint-profit and extracting surplus. Although joint-profit maximization calls for relatively high marginal wholesale prices in order to dampen...

Savings accounts are owned by most households, but little is known about the performance of households’ investments. We create a unique dataset by matching information on individual savings accounts from the DNB Household Survey with market data on account-specific interest rates and...