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A known policy dilemma occurs between the need to curb extra-large profits by some industries, like pharmaceuticals, and the need to ensure the incentive to produce is not damaged. This paper shows that a profit cap, imposed via taxation on a group of firms, can simultaneously eliminate inefficiency and excess profit by intensifying competition among oligopolistic firms. The result has a direct bearing on policy debates on COVID-19 vaccine sharing and the use of vaccine donation as a "humanitarian obligation," and, more generally, on the regulatory institutions needed for industries that rely on R&D. [ABSTRACT FROM AUTHOR]

Analyzes a landlord and a tenant as two players making non-cooperative decisions regarding the terms of their respective contracts with a tenant. Circumstances in which interlinkage is superior; Moral hazard; Incorporation of risk aversion; Changes in the superiority of claims.