Financial contracting with multiple tasks
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In this paper we consider the problem of a firm that needs funding which can be shared between a production plan giving a direct monetary return and some influence activity that increases its reputation in the market and whose outcome is not transferable. Funding is provided by a bank which designs a contract in which a compensation for the firm and an allocation control rule are specified. We verify that, for high returns from the production plan, giving control to the firm exploits complementarity. For low returns from the production plan, the distribution is efficient for any control allocation rule only if we allow for a costly collateral.