NATIONAL BUREAU OF ECONOMIC RESEARCH
NATIONAL BUREAU OF ECONOMIC RESEARCH

Optimum Contracts for Research Personnel, Research Employment, and the Establishment of "Rival" Enterprises

Ariel Pakes, Shmuel Nitzan

NBER Working Paper No. 871
Issued in March 1982
NBER Program(s):   LS   PR

This paper considers the problem of hiring scientists for research and development projects when one takes explicit account of the fact that the scientist may be able to use the information acquired during the project in a rival enterprise. Management's problem is to determine an optimum labor policy for its project. The policy consists of an employment decision and a labor contract. Given optimum behavior, it is straightforward to analyze the effect of the potential for mobility of scientific personnel on project profitability and on research employment. We also formalize conditions under which one would expect to observe a scientist leaving his employer to set up (or join) a rival.

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Published: Pakes, Ariel and Shmuel Nitzan. "Optimum Contracts for Research Personnel, Research Employment, and the Establishment of "Rival" Enterprises." Journalof Labor Economics, Vol. 1, No. 4, (October 1983), pp. 345-365.

 
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