Economics at your fingertips  

Efficient Compensation for Employees’ Inventions

Roland Kirstein and Birgit Will
Additional contact information
Birgit Will: University of Saarland

No 2004-1-1080, German Working Papers in Law and Economics from Berkeley Electronic Press

Abstract: We analyze the legal reform concerning employees' inventions in Germany. Using a simple principal-agent model, we derive a unique efficient payment scheme: a bonus which is contingent on the project value. We demonstrate that the old German law creates inefficient incentives. However, the new law concerning university employees and the pending reform proposal concerning other employees also fail to implement first-best incentives. With suboptimal incentives to spend effort on inventions, the government's goal, an increase in the number of patents, is likely to be missed.

Keywords: Moral hazard; hold-up; efficient fixed wage (search for similar items in EconPapers)
JEL-codes: C72 J K (search for similar items in EconPapers)
Note: oai:bepress:
References: View references in EconPapers View complete reference list from CitEc
Citations: Track citations by RSS feed

Downloads: (external link) (application/pdf)

Related works:
Journal Article: Efficient compensation for employees' inventions (2006) Downloads
Working Paper: Efficient Compensation for Employees? Inventions (2003) Downloads
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link:

Access Statistics for this paper

More papers in German Working Papers in Law and Economics from Berkeley Electronic Press
Bibliographic data for series maintained by Christopher F. Baum ().

Page updated 2023-06-15
Handle: RePEc:bep:dewple:2004-1-1080