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 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.
- Language
-
Englisch
- Bibliographic citation
-
Series: SFB/TR 15 Discussion Paper ; No. 99
- Classification
-
Wirtschaft
Firm Behavior: Theory
Economics of Contract: Theory
- Subject
-
fine
incentives
incomplete contracts
non-compete agreements
option contract
- Event
-
Geistige Schöpfung
- (who)
-
Kräkel, Matthias
Sliwka, Dirk
- Event
-
Veröffentlichung
- (who)
-
Sonderforschungsbereich/Transregio 15 - Governance and the Efficiency of Economic Systems (GESY)
- (where)
-
München
- (when)
-
2006
- DOI
-
doi:10.5282/ubm/epub.13452
- Handle
- URN
-
urn:nbn:de:bvb:19-epub-13452-9
- Last update
-
10.03.2025, 11:42 AM CET
Data provider
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ZBW - Deutsche Zentralbibliothek für Wirtschaftswissenschaften - Leibniz-Informationszentrum Wirtschaft. If you have any questions about the object, please contact the data provider.
Object type
- Arbeitspapier
Associated
- Kräkel, Matthias
- Sliwka, Dirk
- Sonderforschungsbereich/Transregio 15 - Governance and the Efficiency of Economic Systems (GESY)
Time of origin
- 2006
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Universities as stakeholders in their students' careers: On the benefits of graduate taxes to finance higher education
Should You Allow Your Agent to Become Your Competitor? On Non-Compete Agreements in Employment Contracts
Should you allow your agent to become your competitor? On non-compete agreements in employment contracts
On the Notion of Responsibility in Organizations
On the Hidden Costs of Incentive Schemes
Trust as a signal of a social norm and the hidden costs of incentive schemes
On the Hidden Costs of Incentive Schemes
Bonuses and performance evaluations
On the Use of Nonfinancial Performance Measures in Management Compensation
Management Incentives, Signaling Effects and the Costs of Vertical Integration
Can Contracts Signal Social Norms? Experimental Evidence
Risk Taking in Asymmetric Tournaments