Promoting innovation on the seed market and biodiversity: the role of IPRs and commercialisation rules
AbstractThis article deals with the impact of legislation in the seed sector on incentives for variety creation. Two categories of rules interact. The first category consists in intellectual property rights and is intended to address a problem of sequential innovation and R&D investments by the private sector. The second category concerns commercial rules that are intended to correct a problem of adverse selection on the seed market. We propose a dynamic model of market equilibrium with vertical product differentiation that enables us to take into account the economic consequences of imposing either Plant Breeders’ Rights (PBRs) or patents as IPRs. We simultaneously examine two kinds of commercial legislation: compulsory registration in a catalogue and minimum standards for commercialisation. Analytical results are completed by numerical simulations. The main result is that the combination between minimum standards and PBRs provides higher incentives for sequential innovation and may be preferred by a public regulator to maximise the expected and discounted total surplus when sunk investment costs are low or when they are medium and the probability of R&D success is sufficiently high. This solution differs from the combination of IPRs and commercialisation rules used in both the US and Europe. Otherwise, PBRs have to be replaced by patents, which yields a configuration close to that observed in the US. The catalogue commercialisation rule is seldom preferred to minimum standards, so that the combination of IPRs and commercialisation rules that prevails in Europe is not supported by our model.
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Bibliographic InfoPaper provided by University of Paris West - Nanterre la Défense, EconomiX in its series EconomiX Working Papers with number 2014-32.
Length: 38 pages
Date of creation: 2014
Date of revision:
Intellectual Property Rights; Plant Breeders’ Rights; Catalogue; Product differentiation; Asymmetric information; Biodiversity.;
Find related papers by JEL classification:
- D43 - Microeconomics - - Market Structure and Pricing - - - Oligopoly and Other Forms of Market Imperfection
- D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design
- K11 - Law and Economics - - Basic Areas of Law - - - Property Law
- L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets
- Q12 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Micro Analysis of Farm Firms, Farm Households, and Farm Input Markets
This paper has been announced in the following NEP Reports:
- NEP-AGR-2014-06-22 (Agricultural Economics)
- NEP-ALL-2014-06-22 (All new papers)
- NEP-COM-2014-06-22 (Industrial Competition)
- NEP-CTA-2014-06-22 (Contract Theory & Applications)
- NEP-INO-2014-06-22 (Innovation)
- NEP-IPR-2014-06-22 (Intellectual Property Rights)
- NEP-KNM-2014-06-22 (Knowledge Management & Knowledge Economy)
- NEP-LAW-2014-06-22 (Law & Economics)
- .html">NEP-TID-"> (Technology & Industrial Dynamics)
- NEP-TID-2014-06-22 (Technology & Industrial Dynamics)
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