Open Access BASE2003
Efficient Compensation for Employees? Inventions
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. (88 words)
Subjects
Languages
English
Publisher
Saarbrücken: Universität des Saarlandes, Center for the Study of Law and Economics (CSLE)
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