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Competition Issues in the Seed Industry and the Role of Intellectual Property

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  • Moschini, GianCarlo

Abstract

The reawakened interest in competition issues in agricultural markets might appear to have found its ideal poster child in the seed industry. Concentration is high and market structure has shown remarkable dynamics over the last 15 years, with high-profile mergers and acquisitions by key players. A dominant firm—Monsanto—seems to have emerged, at least from the perspective of biotech traits perceived as essential in modern seed varieties. The two largest U.S. seed companies, DuPont and Monsanto, have embarked on a tough legal battle. And the Department of Justice (DOJ) has opened a formal antitrust investigation of Monsanto practices. Yet, despite its many motives of interest, the seed industry’s competition issues are probably not representative of what matters in other agricultural markets. A distinctive feature in the seed industry is that innovation is crucial and heavily dependent on sizeable research and development (R&D) investments. Commitment to R&D by private firms, in turn, relies crucially on the existence and enforcement of intellectual property rights (IPRs), patents in particular. Strong IPRs necessarily confer limited monopoly positions. Whereas that is well understood and widely accepted as a reasonable method to promote the provision of innovation by the private sector, there remains an inherent tension between IPR and antitrust concerns in this industry.
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Suggested Citation

  • Moschini, GianCarlo, 2010. "Competition Issues in the Seed Industry and the Role of Intellectual Property," Choices: The Magazine of Food, Farm, and Resource Issues, Agricultural and Applied Economics Association, vol. 25(2), pages 1-14.
    • Handle: RePEc:ags:aaeach:94757
    DOI: 10.22004/ag.econ.94757
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    References listed on IDEAS

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    1. Giancarlo Moschini & Harvey Lapan, 1997. "Intellectual Property Rights and the Welfare Effects of Agricultural R&D," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 79(4), pages 1229-1242.
    2. GianCarlo Moschini, 2008. "Biotechnology and the development of food markets: retrospect and prospects," European Review of Agricultural Economics, Oxford University Press and the European Agricultural and Applied Economics Publications Foundation, vol. 35(3), pages 331-355, September.
    3. GianCarlo Moschini & Oleg Yerokhin, 2008. "Patents, Research Exemption, and the Incentive for Sequential Innovation," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 17(2), pages 379-412, June.
    4. Moschini, Giancarlo & Yerokhin, Oleg, 2007. "The Economic Incentive to Innovate in Plants: Patents and Plant Breeders’ Rights," ISU General Staff Papers 200701010800001196, Iowa State University, Department of Economics.
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    Citations

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    Cited by:

    1. Luo, Jinjing & Moschini, GianCarlo & Perry, Edward D., 2023. "Switching costs in the US seed industry: Technology adoption and welfare impacts," International Journal of Industrial Organization, Elsevier, vol. 89(C).
    2. MacDonald, James M. & Dong, Xiao & Fuglie, Keith O., 2023. "Concentration and Competition in U.S. Agribusiness," Economic Information Bulletin 337566, United States Department of Agriculture, Economic Research Service.
    3. Benjamin C. Anderson & Ian M. Sheldon, 2024. "R&D Concentration in Soybean and Cotton Markets," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 64(1), pages 93-115, February.
    4. Lemarié Stéphane & Baghdasaryan Delia & Campens Etienne, 2017. "The Product Line Strategy of a Company Selling Seed with a Licensed GM Trait," Journal of Agricultural & Food Industrial Organization, De Gruyter, vol. 15(1), pages 1-15, January.
    5. Abby Kelly & Kalyn T. Coatney & Xiaofei Li & Keith H. Coble, 2020. "Subsidy Incidence in the Presence of Bertrand Suppliers of Complementary Inputs: A U.S. Agricultural Example," Journal of Industry, Competition and Trade, Springer, vol. 20(3), pages 479-501, September.
    6. Liu, Zhen & Kemp, Ron G.M. & Jongsma, Maarten A. & Huang, Caicheng & Dons, J.J.M. & Omta, S.W.F, 2014. "Key Success Factors of Innovation Projects of Vegetable Breeding Companies in China," International Food and Agribusiness Management Review, International Food and Agribusiness Management Association, vol. 17(4), pages 1-28, November.
    7. Chang, Ching-Wen & Yamanaka, Takayuki & Kano, Shingo, 2019. "An enforced loop-out knowledge flow facilitates industry competition: Learning from the pharmaceutical and genetically modified seed industries," Technovation, Elsevier, vol. 79(C), pages 11-24.
    8. Federico Ciliberto & GianCarlo Moschini & Edward D. Perry, 2019. "Valuing product innovation: genetically engineered varieties in US corn and soybeans," RAND Journal of Economics, RAND Corporation, vol. 50(3), pages 615-644, September.
    9. Poe, Abby & Coatney, Kalyn & Coble, Keith & Freeman, Matt, 2014. "Farm Subsidy Incidence in the Presence of Bertrand Competitors of Complementary Factors of Production: A Theoretical Approach," 2014 Annual Meeting, February 1-4, 2014, Dallas, Texas 162507, Southern Agricultural Economics Association.

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    More about this item

    Keywords

    Crop Production/Industries; Research and Development/Tech Change/Emerging Technologies;

    JEL classification:

    • L1 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance
    • L4 - Industrial Organization - - Antitrust Issues and Policies
    • O3 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights
    • Q1 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture

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