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Abstract

In this paper a Developer contracts with a Researcher for the production of a non-drastic innovation. Since effort is non-contractible, the Developer offers an incentive
contract dependent on the observed magnitude of the innovation. It is shown that the distribution of intellectual property rights (IPR) ownership does not affect the level of effort exerted for innovations where the Developer would choose to license the innovation to its competitors. This is because the possibility of leakage of the innovation through licensing subsidies the Developer's payment when IPR is delegated to the Researcher, while at the same time eroding its profit.

Item Type:	Report (Discussion Paper)
Authors/Creators:	Evans, SB
Keywords:	Innovation, Intellectual Property Rights, Licensing
Publisher:	School of Economics and Finance, University of Tasmania
Additional Information:	© 2010 University of Tasmania and the author
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