This paper offers an explanation of the use of tenure-track contracts in academia. It argues that, because the results of academic research cannot be sold, a professor's profitability depends on the market value of the instruction he or she provides. But because that value depends directly on the extent of his or her observable research accomplishments, a profit-maximizing university will dismiss a professor who fails to initially establish a strong research record, but will tolerate a professor who fails to augment a record that is already strong. (Contains 1 figure.)