Efficient Compensation for Employees? Inventions.

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) --Moral hazard,hold-up,efficient fixed wage

Efficient Compensation for Employees' Inventions: An Economic Analysis of a Legal Reform in Germany

The German law on employees' inventions requires employees to report to their employer any invention made in relation with the work contract. An employer claiming the right to the invention is obliged to pay a compensation to the employee. Up to now, this compensation is a matter of negotiations. A reform proposal seeks to introduce a combination of a fixed payment and a share of the project value. Regulations like this can also be found at U.S. universities. Up to now, German scholars enjoyed the privilege of not having to report their inventions to their universities. The new German law concerning inventions made by university scholars has abolished this privilege. Universities now have the right to claim the invention in exchange for a mandatory 30-percent share of the project value. Our model draws on Principal-Agent theory and combines elements of moral hazard and hold-up. We derive a unique efficient payment scheme that consists only of a lump-sum payment. We show that freedom to negotiate over the compensation after the invention has been done provides inefficient incentives. Efficient incentives would require the compensation to be fixed ex-ante, as it is provided by both the proposed law (concerning employees in general) and the new law (concerning university scholars). However, both set the payment schemes in an inefficient way. With suboptimal incentives to spend effort into inventions, the government's goal, an increase in the number of patents, is likely to be missed. -- Dieser Beitrag befaßt sich mit der geplanten und zum Teil schon verwirklichten Reform des Gesetzes über Arbeitnehmererfindungen (ArbEG). Im Mittelpunkt steht die bisher in der Literatur wenig beachtete Analyse der Anreize, die sich aus der Zahlung einer Vergütung durch den Arbeitgeber ergeben. Art und Höhe der Vergütung beeinflussen sowohl das Anstrengungsniveau des Arbeitnehmers bei der Erstellung, als auch das des Arbeitgebers bei der Verwertung der Erfindung. Unsere Analyse basiert auf einem einfachen Prinzipal-Agenten-Modell und verbindet Aspekte des Moral Hazard mit der Hold-Up-Problematik. Es werden zwei Szenarien vorgestellt, die sich bezüglich des Zeitpunktes und der Art der Festlegung der Vergütung unterscheiden. Es wird ein eindeutiges effizientes Ergebnis hergeleitet: Die Vergütung von Arbeitnehmererfindungen sollte sich auf die einmalige Zahlung einer festen Vergütung beschränken, die ex ante festzulegen ist. Gemessen an diesem Ergebnis kann die untersuchte Gesetzesnovelle nur als second best-Lösung eingeschätzt werden.Moral hazard,hold-up,efficient fixed wage

Fighting cartels: some economics of council regulation (EC) 1/2003

This paper investigates the effectiveness of the new Council Regulation (EC) 1/2003 which replaces the mandatory notification and authorization system by a legal exception system. Effectiveness is operationalized via the two subcriteria compliance to Art. 81 EC Treaty and the probabilities of type I and type II errors committed by the European Commission. We identify four different types of Perfect Bayesian Nash Equilibria: fullcompliance, zero-compliance, positive-compliance and full-deterrence. We show that the Commission can, in principle, hit the full-compliance equilibrium, where the cartelizing firms fully obey the requirements of Art 81(3) EC Treaty and both error probabilities are zero. --competition law,cartel law enforcement,legal exception,imperfect

Changes in the polar vortex: Effects on Antarctic total ozone observations at various stations

October mean total column ozone data from four Antarctic stations form the basis for understanding the evolution of the ozone hole since 1960. While these stations show similar emergence of the ozone hole from 1960 to 1980, the records are divergent in the last two decades. The effects of long-term changes in vortex shape and location are considered by gridding the measurements by equivalent latitude. A clear eastward shift of the mean position of the vortex in October with time is revealed, which changes the fraction of ozone measurements taken inside/outside the vortex for stations in the vortex collar region. After including only those measurements made inside the vortex, ozone behavior in the last two decades at the four stations is very similar. This suggests that dynamical influence must be considered when interpreting and intercomparing ozone measurements from Antarctic stations for detecting ozone recovery and ozone-related changes in Antarctic climate

Efficient Compensation for Employees? Inventions.

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

Efficient Compensation for Employees' Inventions: An Economic Analysis of a Legal Reform in Germany

The German law on employees' inventions requires employees to report to their employer any invention made in relation with the work contract. An employer claiming the right to the invention is obliged to pay a compensation to the employee. Up to now, this compensation is a matter of negotiations. A reform proposal seeks to introduce a combination of a fixed payment and a share of the project value. Regulations like this can also be found at U.S. universities. Up to now, German scholars enjoyed the privilege of not having to report their inventions to their universities. The new German law concerning inventions made by university scholars has abolished this privilege. Universities now have the right to claim the invention in exchange for a mandatory 30-percent share of the project value. Our model draws on Principal-Agent theory and combines elements of moral hazard and hold-up. We derive a unique efficient payment scheme that consists only of a lump-sum payment. We show that freedom to negotiate over the compensation after the invention has been done provides inefficient incentives. Efficient incentives would require the compensation to be fixed ex-ante, as it is provided by both the proposed law (concerning employees in general) and the new law (concerning university scholars). However, both set the payment schemes in an inefficient way. With suboptimal incentives to spend effort into inventions, the government's goal, an increase in the number of patents, is likely to be missed.Dieser Beitrag befaßt sich mit der geplanten und zum Teil schon verwirklichten Reform des Gesetzes über Arbeitnehmererfindungen (ArbEG). Im Mittelpunkt steht die bisher in der Literatur wenig beachtete Analyse der Anreize, die sich aus der Zahlung einer Vergütung durch den Arbeitgeber ergeben. Art und Höhe der Vergütung beeinflussen sowohl das Anstrengungsniveau des Arbeitnehmers bei der Erstellung, als auch das des Arbeitgebers bei der Verwertung der Erfindung. Unsere Analyse basiert auf einem einfachen Prinzipal-Agenten-Modell und verbindet Aspekte des Moral Hazard mit der Hold-Up-Problematik. Es werden zwei Szenarien vorgestellt, die sich bezüglich des Zeitpunktes und der Art der Festlegung der Vergütung unterscheiden. Es wird ein eindeutiges effizientes Ergebnis hergeleitet: Die Vergütung von Arbeitnehmererfindungen sollte sich auf die einmalige Zahlung einer festen Vergütung beschränken, die ex ante festzulegen ist. Gemessen an diesem Ergebnis kann die untersuchte Gesetzesnovelle nur als second best-Lösung eingeschätzt werden

Means and Meanings of Research Collaboration in the Face of a Suffering Earth : A Landscape of Questions

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