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The Value of Biodiversity in Pharmaceutical Research with Differentiated Products

  • Amy Craft
  • R. Simpson
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    Biologists and conservation advocates have expressed grave concern over perceived threats to biological diversity. ``Biodiversity prospecting'' – the search among naturally occurring organisms for new products of agricultural, industrial, and, particularly, pharmaceutical value – has been advanced as both a mechanism and a motive for conserving biological diversity. Economists and others have attempted to estimate the value of biodiversity for use in new pharmaceutical project research. In this paper we apply a new approach to estimating values: we employ two models of competition among differentiated products. Each model confirms previous findings that the value to private researchers of the ``marginal species'' is likely to be small. The models can have very different implications with respect to social values, however. These findings underscore the need for a better understanding of the true meaning of diversity. Copyright Kluwer Academic Publishers 2001

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    Article provided by European Association of Environmental and Resource Economists in its journal Environmental and Resource Economics.

    Volume (Year): 18 (2001)
    Issue (Month): 1 (January)
    Pages: 1-17

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    Handle: RePEc:kap:enreec:v:18:y:2001:i:1:p:1-17
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    1. Rausser, Gordon C. & Small, Arthur A., 2000. "Valuing Research Leads: Bioprospecting and the Conservation of Genetic Resources," Berkeley Olin Program in Law & Economics, Working Paper Series qt4t56m5b8, Berkeley Olin Program in Law & Economics.
    2. Brown, Gardner Jr. & Goldstein, Jon H., 1984. "A model for valuing endangered species," Journal of Environmental Economics and Management, Elsevier, vol. 11(4), pages 303-309, December.
    3. Dixit, Avinash K & Stiglitz, Joseph E, 1977. "Monopolistic Competition and Optimum Product Diversity," American Economic Review, American Economic Association, vol. 67(3), pages 297-308, June.
    4. Rausser, G.C. & Small. A.A., 1998. "Bioprospecting with Patent Races," Papers 98-07, Columbia - Graduate School of Business.
    5. Simpson, R. David & Craft, Amy, 1996. "The Social Value of Using Biodiversity in New Pharmaceutical Product Research," Discussion Papers dp-96-33, Resources For the Future.
    6. Simpson, R David & Sedjo, Roger A & Reid, John W, 1996. "Valuing Biodiversity for Use in Pharmaceutical Research," Journal of Political Economy, University of Chicago Press, vol. 104(1), pages 163-85, February.
    7. Solow Andrew & Polasky Stephen & Broadus James, 1993. "On the Measurement of Biological Diversity," Journal of Environmental Economics and Management, Elsevier, vol. 24(1), pages 60-68, January.
    8. Sedjo, Roger & Simpson, R. David, 1996. "Valuation of Biodiversity for Use in New Product Research in a Model of Sequential Search," Discussion Papers dp-96-27, Resources For the Future.
    9. Polasky Stephen & Solow Andrew R., 1995. "On the Value of a Collection of Species," Journal of Environmental Economics and Management, Elsevier, vol. 29(3), pages 298-303, November.
    10. Economides, Nicholas, 1989. "Symmetric equilibrium existence and optimality in differentiated product markets," Journal of Economic Theory, Elsevier, vol. 47(1), pages 178-194, February.
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