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Welfare Impacts of Property Rights in the Seed Industry

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  • Lence, Sergio H.
  • Hayes, Dermot J.
  • McCunn, Alan
  • Smith, Stephen C.
  • Niebur, Bill

Abstract

The paper examines the welfare impact of different intellectual property right (IPR) regimes in private sector seed research. The model takes into account the period after expiration of IPR protection, and requires a simultaneous equilibrium in the markets for R&D, seeds, and final product (grain). Simulation results show that with the exception of R&D productivity, the optimal level of IPR protection is remarkably insensitive to parameters of the model. There is a range of IPR appropriability levels where the interests of consumers and producers (taken together) are complementary to the interests of R&D firms, and another range of appropriability levels where the welfare of producers and consumers can be increased only at the expense of the welfare R&D firms. These results may explain some of the acrimony in the debate about plant gene patenting and genetic use-restriction technologies (GURTs). Results suggest that the optimum IPR appropriability level is greater than that which exists in the North American seed corn market, but lower than would exist if GURTs were to become widely used. The optimal appropriability level is much higher than that which is achieved in situations where crops are open pollinated or where IPR protection is limited, and this may help explain and justify the relevance of public research in these situations.

Suggested Citation

  • Lence, Sergio H. & Hayes, Dermot J. & McCunn, Alan & Smith, Stephen C. & Niebur, Bill, 2003. "Welfare Impacts of Property Rights in the Seed Industry," 2003 Annual meeting, July 27-30, Montreal, Canada 22187, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    • Handle: RePEc:ags:aaea03:22187
    DOI: 10.22004/ag.econ.22187
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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. Rausser, Gordon C & Freebairn, John W, 1974. "Estimation of Policy Preference Functions: An Application to U.S. Beef Import Quotas," The Review of Economics and Statistics, MIT Press, vol. 56(4), pages 437-449, November.
    3. Alston, Julian M. & Venner, Raymond J., 2002. "The effects of the US Plant Variety Protection Act on wheat genetic improvement," Research Policy, Elsevier, vol. 31(4), pages 527-542, May.
    4. Pardey, Philip G. & Beintema, Nienke M., 2001. "Slow magic: agricultural R&D a century after Mendel," Food policy statements 36, International Food Policy Research Institute (IFPRI).
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    Cited by:

    1. Daniel Nepelski & Giuditta De Prato, 2012. "Does the Patent Cooperation Treaty work? A global analysis of patent applications by non-residents," JRC Research Reports JRC79541, Joint Research Centre (Seville site), revised Nov 2012.

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