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In this article we analyze an informed firm's choice of financial structure when the financing contract is observed not only by the capital market but also by a second uninformed party, such as a competing firm. The informed firm's gross profit is endogenous, because the second party's action depends on the transaction it observes between the informed firm and the capital market. The main result is that the reasonable capital-market equilibria maximizethe ex ante expectation of the informed firm's endogenous gross profits. In distinct contrast to earlier work, which focuses on separating equilibria, in our model it is often the case that all the reasonable equilibria are pooling.

JSTOR is a not-for-profit service that helps scholars, researchers, and students discover, use, and build upon a wide range of content in a trusted digital archive. We use information technology and tools to increase productivity and facilitate new forms of scholarship. For more information about JSTOR, please contact support@jstor.org.Abstract. In this paper I argue that the transition from commodity money to fiat money in the 1970s was a less dramatic change than suggested by a first glance at monetary history or monetary theory. I show that, historically, the quantity of the commodity-based money was at the discretion of the monetary authority and how, over time, the desire to economize on the commodity backing led to national and international institutions that reduced the extent to which money issues under the commodity standard represented an explicit claim to an intrinsically valuable asset. All use subject to JSTOR Terms and Conditions 778 Angela Redish early 1970s the last tie to the gold standard was broken when the Bretton Woods system collapsed, and the United States suspended convertibility of u.s. dollars into gold. Fiat money (for which I will use Wallace's (1980) definition: money that is inconvertible and intrinsically useless) was to be the basis of the monetary system. This paper analyses the transition from a commodity-based monetary system to the fiat money system. This choice of topic is motivated by both theoretical and historical factors. In theory, there seems to be a vast chasm between a commodity money system, where the quantity of money is determined by nature (possibly at some remove) and the value of money is intrinsic, and a fiat money system, where the determinants of value are puzzling and the quantity of money is a matter of policy. The historical motivation comes from my research into the origins of the Bank of Canada in the course of which I was struck by the confidence with which Canadian policy-makers in the early 1930s anticipated the resumption of the international gold standard (Bordo and Redish 1987). Why the change of heart?What I am going to present is unfortunately not a complete answer; rather, it is the foundation for a case that the process was more gradual than the simple comparison between attitudes in 1930 and 1970or than simple comparisons of economies with fiat money and commodity moneysuggests.The collapse of Bretton Woods has been studied extensively, primarily in the context of the post-World War ii economy, although sometimes in the context of interwar economic problems and even the classical gold standard. Here I study the evolution of the system in a broader context: as part of the evolution from a pure commodity money system to a fiat money system. My view of the collapse of Bretton Woods is the story of a ship on a finite anchor chain, in rising seas: At some point one has to cut the chain to save the ship. I will argue that the seas had been rising not just in the Bretton Woods period, but for many decades previouslyand indeed were the motivating force...

I investigate the issue of endogenous spillover of R&D information across Jirms through infonnation exchange betvveen their employees. Although the Jinns typically cannot observe and restrict communication betvveen their employees in a direct way, tIzej1 can regulate information Jlows through the incentive schemes offered to the employees. This article focuses on two issues: characterization of the optimal incentive schemes, and the link between the nature of the jirms' interaction in the product market and the intensi5 of information exchange between the employees.

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