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The Economics Of Intellectual Property Rights Under Imperfect Enforcement

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  • Giannakas, Konstantinos

Abstract

The introduction of intellectual property rights (IPRs) is one of the most notable features of agricultural biotechnology. So are growing concerns about the widespread violation of IPRs in developing countries. This paper develops a model of heterogeneous producers to examine the economic causes of IPR infringement and its consequences for the welfare of the interest groups and the pricing and adoption of a new technology (i.e., a genetically modified seed) in the context of a small open developing economy. Enforcement of IPRs, and pricing and adoption of the new technology are modeled as a sequential game between the government that enforces the IPRs, a foreign innovating firm that prices the new technology, and the developing country's producers who make the production and cheating decisions. Analytical results show that producer compliance with the provisions of IPRs is not the natural outcome of self-interest and complete deterrence of IPR infringement is not always economically optimal. IPR infringement affects the welfare of the interest groups and has important ramifications for the pricing and adoption of the new technology. The quantitative nature of the results depends critically on the existing labeling regime. The analysis also shows that differences in the level of IPR enforcement provide an alternative justification for (and explanation of) differences in the pricing of the new technology in different countries around the world - a strategy adopted by leading innovators in the sector. Finally, the results suggest that if the penalties for IPR infringement under the TRIPs agreement follow the custom of retaliatory sanctions under the GATT, enforcement of IPRs will remain imperfect and the innovators' ability to obtain value for their biotech traits will still be limited.

Suggested Citation

  • Giannakas, Konstantinos, 2001. "The Economics Of Intellectual Property Rights Under Imperfect Enforcement," 2001 Annual meeting, August 5-8, Chicago, IL 20584, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    • Handle: RePEc:ags:aaea01:20584
    DOI: 10.22004/ag.econ.20584
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    References listed on IDEAS

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    1. R. A. Carr-Hill & N. H. Stern, 1977. "Theory and Estimation in Models of Crime and its Social Control and their Relations to Concepts of Social Output," International Economic Association Series, in: Martin S. Feldstein & Robert P. Inman (ed.), The Economics of Public Services, chapter 6, pages 116-147, Palgrave Macmillan.
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    Cited by:

    1. Falck Zepeda, José & Barreto-Triana, Nancy & Baquero-Haeberlin, Irma & Espitia-Malagón, Eduardo & Fierro-Guzmán, Humberto & López, Nancy, 2006. "An exploration of the potential benefits of integrated pest management systems and the use of insect resistant potatoes to control the Guatemalan Tuber Moth (Tecia solanivora Povolny) in Ventaquemada,," EPTD discussion papers 152, International Food Policy Research Institute (IFPRI).
    2. Gaisford, James D., 2002. "Agricultural Biotechnology and the FTAA: Issues and Opportunities," Estey Centre Journal of International Law and Trade Policy, Estey Centre for Law and Economics in International Trade, vol. 3(2), pages 1-18.
    3. James D. Gaisford & Robert Tarvydas & Jill E. Hobbs & William A. Kerr, 2002. "Biotechnology Piracy: Rethinking the International Protection of Intellectual Property," Canadian Journal of Agricultural Economics/Revue canadienne d'agroeconomie, Canadian Agricultural Economics Society/Societe canadienne d'agroeconomie, vol. 50(1), pages 15-34, March.
    4. Linacre, Nicholas & Falck-Zepeda, José & Komen, John & MacLaren, Donald, 2006. "Risk assessment and management of genetically modified organisms under Australia's Gene Technology Act:," EPTD discussion papers 157, International Food Policy Research Institute (IFPRI).
    5. Nottenburg, Carol & Pardey, Philip G. & Wright, Brian D., 2002. "Accessing other people’s technology for non-profit research," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 46(3), pages 1-28.
    6. Pardey, Philip G. & Alston, Julian M. & Chan-Kang, Connie & Magalhães, Eduardo C. & Vosti, Stephen A., 2002. "Assessing and attributing the benefits from varietal improvement research: evidence from Embrapa, Brazil," EPTD discussion papers 95, International Food Policy Research Institute (IFPRI).
    7. Xiaobo Zhang & Shenggen Fan, 2004. "How Productive Is Infrastructure? A New Approach and Evidence from Rural India," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 86(2), pages 492-501.
    8. Paul J. Block & Kenneth Strzepek & Mark W. Rosegrant & Xinshen Diao, 2008. "Impacts of considering climate variability on investment decisions in Ethiopia," Agricultural Economics, International Association of Agricultural Economists, vol. 39(2), pages 171-181, September.
    9. Gruère, Guillaume & Giuliani, Alessandra & Smale, Melinda, 2006. "Marketing underutilized plant species for the benefit of the poor: a conceptual framework," EPTD discussion papers 154, International Food Policy Research Institute (IFPRI).
    10. Gruère, Guillaume P., 2006. "An analysis of trade related international regulations of genetically modified food and their effects on developing countries:," EPTD discussion papers 147, International Food Policy Research Institute (IFPRI).
    11. Maxwell, Brett J. & Wilson, William W. & Dahl, Bruce L., 2004. "Marketing Mechanisms In Gm Grains And Oilseeds," Agribusiness & Applied Economics Report 23639, North Dakota State University, Department of Agribusiness and Applied Economics.
    12. Di Falco, Salvatore & Chavas, Jean-Paul & Smale, Melinda, 2006. "Farmer management of production risk on degraded lands: the role of wheat genetic diversity in Tigray Region, Ethiopia," EPTD discussion papers 153, International Food Policy Research Institute (IFPRI).
    13. Smale, Melinda & Zambrano, Patricia & Falck-Zepeda, José & Gruère, Guillaume, 2006. "Parables: applied economics literature about the impact of genetically engineered crop varieties in developing economies," EPTD discussion papers 158, International Food Policy Research Institute (IFPRI).

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