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Contracting and the Disclosure of Ideas in the Innovation Process


  • David Martimort
  • Jean-Christophe Poudou
  • Wilfried Sand-Zantman


We analyze contracting between an innovator endowed with an idea and a project developer. The innovator has private information about the value of his idea, whereas the developer must exert some non-verifiable effort at the development stage. The developer may also threaten to leave the relationship after being informed on the value of the idea. The equilibrium contracts distort downwards the developer's incentives, but differently so depending on the strength of intellectual property rights (IPR). In particular, with intermediate IPR, only pooling contracts arise, with a limited amount of information being revealed at equilibrium.

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  • David Martimort & Jean-Christophe Poudou & Wilfried Sand-Zantman, 2011. "Contracting and the Disclosure of Ideas in the Innovation Process," Annals of Economics and Statistics, GENES, issue 101-102, pages 287-305.
  • Handle: RePEc:adr:anecst:y:2011:i:101-102:p:287-305

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    1. Victor Ginsburgh & Ignacio Ortuño-Ortín & Shlomo Weber, 2005. "Disenfranchisement In Linguistically Diverse Societies: The Case Of The European Union," Journal of the European Economic Association, MIT Press, vol. 3(4), pages 946-965, June.
    2. Shy,Oz, 2001. "The Economics of Network Industries," Cambridge Books, Cambridge University Press, number 9780521800952, March.
    3. Victor Ginsburgh & Shlomo Weber, 2005. "Language Disenfranchisement in the European Union," Journal of Common Market Studies, Wiley Blackwell, vol. 43(2), pages 273-286, June.
    4. Jeffrey Church & Ian King, 1993. "Bilingualism and Network Externalities," Canadian Journal of Economics, Canadian Economics Association, vol. 26(2), pages 337-345, May.
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