Arbeitspapier
Should You Allow Your Agent to Become Your Competitor? On Non-Compete Agreements in Employment Contracts
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 if the agent faces limited liability and there is an incentive problem the principal prefers not to impose such a clause if and only if the principal's profits from entering the market are sufficiently large relative to the agent's outside option. If the principal can impose a fine on the agent for leaving the firm, she will never prefer a non-compete agreement.
- Sprache
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Englisch
- Erschienen in
-
Series: Bonn Econ Discussion Papers ; No. 4/2006
- Klassifikation
-
Wirtschaft
Economics of Contract: Theory
Firm Behavior: Theory
- Thema
-
fine
incentives
incomplete contracts
non-compete agreements
option contract
- Ereignis
-
Geistige Schöpfung
- (wer)
-
Kräkel, Matthias
Sliwka, Dirk
- Ereignis
-
Veröffentlichung
- (wer)
-
University of Bonn, Bonn Graduate School of Economics (BGSE)
- (wo)
-
Bonn
- (wann)
-
2006
- Handle
- Letzte Aktualisierung
-
12.03.2025, 03:16 MEZ
Datenpartner
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Objekttyp
- Arbeitspapier
Beteiligte
- Kräkel, Matthias
- Sliwka, Dirk
- University of Bonn, Bonn Graduate School of Economics (BGSE)
Entstanden
- 2006
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