Reference

David Martimort, Jean-Christophe Poudou, and Wilfried Sand-Zantman, Contracting and Ideas Disclosure in the Innovation Process, TSE Working Paper, n. 09-053, June 2009.

Abstract

We analyze the contract between an innovator and a developer, when the former has private information on his idea and the latter must exert efforts but may also quit the relationship after having been informed. We show that the equilibrium contracts distort downwards the developer's incentives but in different ways according to the strength of intellectual property rights (IPR). For example, with intermediate IPR, only pooling contracts arise with a limited amount of information revealed.

David Martimort, Jean-Christophe Poudou, and Wilfried Sand-Zantman, Contracting and Ideas Disclosure in the Innovation Process, Annales d'Économie et de Statistique, Paris : Institut national de la statistique et des études économiques, vol. 101, 2011, pp. 287–306.