Should you allow your agent to become your competitor? on non-compete agreements in employment contracts
By: by Matthias Kräkel, Dirk Sliwka
Series: Discussion paper -- no. 2054; Discussion paper (Forschungsinstitut zur Zukunft der Arbeit : Online) -- no. 2054
Publisher: IZA
Published: 2006
Place of publication: Bonn, Germany
Language: eng
Format: [electronic resource] /
Subjects: Labor contract; Competition
Description: "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 contract for retaining the agent, she will never prefer a strict non-compete agreement"--Forschungsinstitut zur Zukunft der Arbeit web site.
Notes: Title from PDF file as viewed on 4/3/2006.

Includes bibliographical references.

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