Trade Secret Laws, Labour Mobility and Innovations

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Trade Secret Laws, Labour Mobility and Innovations

Author Info

Motta, Massimo
Rønde, Thomas

Additional information is available for the following registered author(s):

Massimo Motta

Abstract

We show that when the researcher’s (observable but not contractible) contribution to innovation is crucial, a covenant not to compete (CNC) reduces effort 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.

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Paper provided by C.E.P.R. Discussion Papers in its series CEPR Discussion Papers with number 3615.

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Date of creation: Oct 2002
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Handle: RePEc:cpr:ceprdp:3615

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Paper
- Motta, Massimo & Rønde, Thomas, 2002. "Trade secret laws, labor mobility, and innovations," Working Papers 08-2002, Copenhagen Business School, Department of Economics. [Downloadable!]

Find related papers by JEL classification:
J30 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - General
K20 - Law and Economics - - Regulation and Business Law - - - General
L14 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Transactional Relationships; Contracts and Reputation
O31 - Economic Development, Technological Change, and Growth - - Technological Change - - - Innovation and Invention: Processes and Incentives
O34 - Economic Development, Technological Change, and Growth - - Technological Change - - - Intellectual Property Rights

This paper has been announced in the following NEP Reports:

NEP-ALL-2003-03-14 (All new papers)

References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:

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Full references

Cited by:
(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

Andrea Fosfuri & Thomas Rønde, 2003. "High-tech clusters, technology spillovers, and trade secret laws," CIE Discussion Papers 2003-02, University of Copenhagen. Department of Economics. Centre for Industrial Economics. [Downloadable!]
Kameshwari Shankar & Suman Ghosh, 2005. "Favorable Selection in the Labor Market: A Theory of Worker Mobility in R&D Intensive Industries," Working Papers 05006, Department of Economics, College of Business, Florida Atlantic University. [Downloadable!]
Fosfuri, Andrea & Rønde, Thomas, 2002. "High-tech clusters, technology spillovers, and trade secret laws," Working Papers 07-2002, Copenhagen Business School, Department of Economics. [Downloadable!]
Chrysovalantou Milliou, 2006. "Endogenous Protection Of R&D Investments," Economics Working Papers we066325, Universidad Carlos III, Departamento de Economía. [Downloadable!]
Fosfuri, Andrea & Rønde, Thomas, 2003. "High-Tech Clusters, Technology Spillovers and Trade Secret Laws," CEPR Discussion Papers 4130, C.E.P.R. Discussion Papers. [Downloadable!] (restricted)

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