Research

Working papers

Non-competition Agreements and Dedicated Human Capital (Job Market Paper)  Github, Google drive 

How does the optimal stringency of a non-competition agreement (noncompete) vary with the employee's position inside a firm's hierarchy? I propose a theoretical model in which the employee's productivity increases with their position. A noncompete tilts the holdup power towards the firm. In equilibrium, employees in top positions are subject to a noncompete and the firm promises high compensation to ensure that they exert effort. Employees in middle positions are free from the covenant so that they maintain their incentives to exert effort for a lower wage. Strikingly, noncompete reappears at the bottom of the firm's hierarchy. Since the employees' productivity is low, their compensation does not incentivize effort. A policy to ban noncompetes for bottom positions increases social welfare if the training the firm provides is sufficiently valuable outside the firm and the firm dismisses employees infrequently.  


The Economics of Non-competition Clauses

A crucial organizational decision is the degree of access an employee is provided to the critical asset of the firm. Access increases the employee's productivity inside the firm, but also enables the agent to compete upon leaving the firm. I study the optimal compensation package of an employee in terms of access, wage, and noncompete for different levels of ability. I show that the firm compensates the lowest ability agents via access while offering the minimum wage and strictest noncompete, since access not only increases the employee's utility but also the firm's production. For higher ability agents, the maximum degree of access is provided, while the rest of the compensation depends on the damage the employee causes with competing. With low damages, the firm offers a lax noncompete with smaller wages. If the damage is high, higher wages and stricter noncompete are offered. The pattern based on damages is observed in CEO contracts [Kini et al., 2020].


How to enforce platforms' liability?

The role of online platforms has grown substantially in recent years, leading to an increase in illegal content uploads. New regulations are being developed to tackle the issue, such as the Digital Services Act by the European Union. This paper develops a model to illustrate that policing on online platforms is not only a technological issue but a matter of economic incentives, too. In the model, heterogeneous agents of a strictly liable platform may violate the rules set by a policymaker. The higher the type of the agent, the larger the benefit she brings to the platform, but also the larger the societal harm if she violates the rules. The paper argues that overly simplistic regulations can actually worsen the problem of "cherry-picking", where platforms punish only low-type agents and not high-type ones. To avoid cherry-picking, the optimal sanction may be lower when more agents commit a violation. Based on Twitter unsuspension data, I provide evidence consistent with cherry-picking.

Work in Progress


A Theory of Employment Based on Intangible Capital