| Abstract | In the process of R&D outsourcing, the principal pursues commercial goals, while the agent pursues academic goals, hence, the allocation of termination rights becomes important. If the academic extent of the lead compound that the agent screens is below a threshold, that is, the commercial extent of the lead compound that the agent screens is above a threshold, then the firm , which functions as a principal, will delegate the termination rights to the agent; if the academic extent of the lead compound that the agent screens is above a threshold, that is, the commercial extent of the lead compound that the agent screens is below a threshold, then the firm will retain the termination rights. As the ratio of the implementing wage to the total value of the lead compound becomes larger, the interval of the principal’s no-delegating will become narrower; when the ratio of the implementing wage to the total value of the lead compound is relatively small, the interval of the principal’s delegating will becomes wider as the ratio becomes larger, however, when the ratio of the implementing wage to the total value of the lead compound is relatively large, the interval of the principal’s delegating will becomes narrower as the ratio becomes larger. The principal’s delegating is socially efficient, while the principal’s no-delegating is not necessarily socially efficient: when the academic extent of the lead compound that the agent screens is very large, the principal’s no-delegating is not socially efficient. As for empirical analyses, the empirical evidence in reality proves some theoretical results to a great extent. |