Intellectual Property Rights and Crop-Improving R&D under Adaptive Destruction
AbstractThis paper studies how the strength of intellectual property rights (IPRs) affects investments in biological innovations when the value of an innovation is stochastically reduced to zero because of the evolution of pest resistance. We frame the problem as a research and development (R&D) investment game in a duopoly model of sequential innovation. We characterize the incentives to invest in R&D under two competing IPR regimes, which differ in their treatment of the follow-on innovations that become necessary because of pest adaptation. Depending on the magnitude of the R&D cost, ex ante firms might prefer an intellectual property regime with or without a "research exemption" provision. The study of the welfare function that also accounts for benefit spillovers to consumersÃ¢â¬âwhich is possible analytically under some parametric conditions, and numerically otherwiseÃ¢â¬âshows that the ranking of the two IPR regimes depends critically on the extent of the R&D cost.
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Bibliographic InfoArticle provided by European Association of Environmental and Resource Economists in its journal Environmental and Resource Economics.
Volume (Year): 40 (2008)
Issue (Month): 1 (May)
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Web page: http://www.springerlink.com/link.asp?id=100263
Biological resistance; Intellectual property rights; Markov perfect equilibrium; Patents; Research exemption; R&D; Sequential innovation; L00; O31; O34; Q28;
Other versions of this item:
- Yerokhin, Oleg & Moschini, GianCarlo, 2007. "Intellectual Property Rights and Crop-Improving R&D Under Adaptive Destruction," Staff General Research Papers 12825, Iowa State University, Department of Economics.
- Oleg Yerokhin & GianCarlo Moschini, 2007. "Intellectual Property Rights and Crop-Improving R&D under Adaptive Destruction," Center for Agricultural and Rural Development (CARD) Publications 07-wp449, Center for Agricultural and Rural Development (CARD) at Iowa State University.
- L00 - Industrial Organization - - General - - - General
- O31 - Economic Development, Technological Change, and Growth - - Technological Change; Research and Development; Intellectual Property Rights - - - Innovation and Invention: Processes and Incentives
- O34 - Economic Development, Technological Change, and Growth - - Technological Change; Research and Development; Intellectual Property Rights - - - Intellectual Property Rights
- Q28 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation - - - Government Policy
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
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