MRF: DONE WITH THE RESPONSE LETTERS!!!

FUCK REVIEWER 1!!!

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To echo your concern, our revision has demonstrated that, channel models capable of addressing real policy questions must be both stochastic and dynamic. There are fundamental aspects of channel practices that stylized static and binary models cannot capture. Stylized binary models, even dynamic ones, seem unable to explain certain observations of the real world. They are a poor guide to what is really going on in complex situations. Worse, they may even prescribe misleading policy recommendations.

In this sense, our new continuous model is an attempt to highlight the blind spots of those stylized models, e.g., when market condition is continuous and nonstationary.

Once again, we are grateful for your constructive comments. They provide us with inspirations and clear guidance for the revision. We have made a sincere effort to address every concern in your report. Indeed, the effort has significantly improved the paper in novelty, relevance, and rigor.

In particular, we focus the revision on pushing the envelop of existing results and developing new insights. We (i) develop a general continuous framework, (ii) formalize MI, (iii) specify how firms should adapt, (vi) characterize when optimal contracts are simple, and (v) highlight the reach and limitation of existing insights. Our work provides a new language that expands the range of channel issues one can address. It furthers our understanding on when and how to use dynamic private information in channel contracting.

We hope you find the revision satisfactory.

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MRF: DONE WITH THE RESPONSE LETTERS!!!

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