A Theory of Trade Secrets in Firms
Queen's University - Department of Economics
October 3, 2000
USC Finance & Business Econ. Working Paper No. 01-20
This paper provides a simple theoretical model of trade secrets in hierarchical firms. A crucial assumption is that each manager has access to trade secrets pertaining to his own hierarchical level as well as to all lower levels. The paper explores some implications of this assumption for the optimal degree of trade secrets accumulation and protection as well as for the wage structure in firms. In addition, the model implies that managers may have an incentive to overpay their subordinates and protect their firms' trade secrets too much.
Number of Pages in PDF File: 23
Keywords: Trade Secrets, Turnover, Wage Structure
JEL Classification: O3, J31, J63working papers series
Date posted: November 1, 2000
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