Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/208457
Authors: 
Motta, Massimo
Rønde, Thomas
Year of Publication: 
2002
Series/Report no.: 
Working paper 8-2002
Abstract: 
We show that when the researcher’s (observable but not contractible) contribution to innovation is crucial, a covenant not to compete (CNC) reduces e.ort and profits under both spot and relational contracts. Having no CNC allows the researcher to leave for a rival. This alleviates a commitment problem by forcing the firm to reward a successful researcher. However, if the firm’s R&D investment mainly matters, including a CNC in the contract is optimal, as it ensures the firm’s incentives to invest.
Subjects: 
Innovation
intellectual property rights
labor contracts
poaching
relational contracts
start-ups
JEL: 
J30
K20
L14
O31
O34
Persistent Identifier of the first edition: 
Creative Commons License: 
https://creativecommons.org/licenses/by-nc-nd/3.0/
Document Type: 
Working Paper

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