10.17889/E112131V1
Malmendier, Ulrike
Lerner, Josh
Replication data for: Contractibility and the Design of Research Agreements
ICPSR Inter-university Consortium for Political and Social Research
2010
10.1257/aer.100.1.214
10.1257/aer.100.1.214
1
We analyze how contractibility affects contract design. A major concern when
designing research agreements is that researchers use their funding to subsidize
other projects. We show that, when research activities are not contractible, an
option contract is optimal. The financing firm obtains the option to terminate
the agreement and, in case of termination, broad property rights. The threat
of termination deters researchers from cross-subsidization, and the cost of
exercising the termination option deters the financing firm from opportunistic
termination. We test this prediction using 580 biotechnology research agreements.
Contracts with termination options are more common when research is
non-contractible. (JEL D86, L65, O31, O34)