Abstract: In the innovative products R&D outsourcing project, the asymmetric cost information of the outsourcing enterprise brings income risk to the contracting enterprise. Focused on such issues, the screening model in principal-agent theory is used to incentive the outsourcing enterprise disclose their real cost information. The contracting enterprise provides the outsourcing screening contract to outsourcing enterprises which divided into two kinds, the higher cost factor and the lower cost factor. The screening contract is designed with two main parameters called fixed payment and revenue sharing coefficient to induce the outsourcing enterprises to choose the suitable contract and give the optimal level of effort. The conclusions imply that the fixed payment and revenue sharing coefficient in screening contract are affected by the proportion of the number of two kinds of different cost factor outsourcing enterprises, and the outsourcer with lower cost factor gets not only reservation utility but extra information rent. With the number of high cost factor outsourcers in the market increasing, the contractors may reduce the expected profits.

Key words: asymmetric information, screening contract, innovative product, cost coefficient, adverse selection