Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/94152
Authors: 
Kräkel, Matthias
Sliwka, Dirk
Year of Publication: 
2006
Series/Report no.: 
SFB/TR 15 Discussion Paper 99
Abstract: 
We discuss a principal-agent model in which the principal has the opportunity to include a non-compete agreement in the employment contract. We show that not imposing such an agreement can be beneficial for the principal as the possibility to leave the firm generates implicit incentives for the agent. The principal prefers to impose such a clause if and only if the value created is sufficiently small relative to the agent's outside option. If the principal can use an option con- tract for retaining the agent, she will never prefer a strict non-compete agreement.
Subjects: 
fine
incentives
incomplete contracts
non-compete agreements
option contract
JEL: 
D21
D86
J3
K1
M5
Persistent Identifier of the first edition: 
Document Type: 
Working Paper

Files in This Item:
File
Size





Items in EconStor are protected by copyright, with all rights reserved, unless otherwise indicated.