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An Economic Model for Bioprospecting Contracts

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  • Ding, Helen
  • Nunes, Paulo A.L.D.
  • Onofri, Laura

Abstract

This paper explores the use of a micro-economic model to analyse the provisions and parties of bioprospecting contracts. It focuses on the pharmaceutical industry as the representative biodiversity buyer, presenting an original theoretical framework that explains the main contract characteristics or stylised facts. Against this background, it considers the main contractors involved in these private contracts, i.e. biodiversity sellers and biodiversity buyers, analysing both the magnitude and distribution of the respective payoffs. Particular attention is devoted to the different, mixed impacts of bioprospecting contracts and patenting on social welfare. The positive welfare impacts delivered by bioprospecting contracts are associated with the potential discovery of a new drug product, i.e. productivity gains, non-monetary benefit-sharing or transfers and royalty revenues. The negative welfare impact results from the legal creation of a monopoly and the related well-known effect on the consumer surplus. Finally, the potential redistribution effects are limited, and a potential enforcement of this objective may jeopardise the desirability of the contracts since this action would lead to a significant increase in the transaction costs.

Suggested Citation

  • Ding, Helen & Nunes, Paulo A.L.D. & Onofri, Laura, 2007. "An Economic Model for Bioprospecting Contracts," Sustainability Indicators and Environmental Valuation Working Papers 7450, Fondazione Eni Enrico Mattei (FEEM).
    • Handle: RePEc:ags:feemsi:7450
    DOI: 10.22004/ag.econ.7450
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    as
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    Cited by:

    1. Sonja S. Teelucksingh & Paulo A.L.D. Nunes, 2010. "Biodiversity Valuation in Developing Countries: A Focus on Small Island Developing States (SIDS)," Working Papers 2010.111, Fondazione Eni Enrico Mattei.
    2. Onofri, Laura, 2014. "Material transfer agreements: An economic and econometric analysis," Ecological Economics, Elsevier, vol. 107(C), pages 422-430.
    3. Magalhães de Oliveira, Gustavo & Zylbersztajn, Decio, 2017. "Determinants of Outsourcing Contracts in Agricultural Mechanization Services: the Brazilian Coffee Agribusiness Case," 2018 International European Forum (163rd EAAE Seminar), February 5-9, 2018, Innsbruck-Igls, Austria 276931, International European Forum on System Dynamics and Innovation in Food Networks.
    4. Wenjuan Cheng & Alessio D’Amato & Giacomo Pallante, 2020. "Benefit sharing mechanisms for agricultural genetic diversity use and on-farm conservation," Economia Politica: Journal of Analytical and Institutional Economics, Springer;Fondazione Edison, vol. 37(1), pages 337-355, April.

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    Keywords

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    JEL classification:

    • D21 - Microeconomics - - Production and Organizations - - - Firm Behavior: Theory
    • D23 - Microeconomics - - Production and Organizations - - - Organizational Behavior; Transaction Costs; Property Rights
    • D61 - Microeconomics - - Welfare Economics - - - Allocative Efficiency; Cost-Benefit Analysis
    • L14 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Transactional Relationships; Contracts and Reputation
    • Q57 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Ecological Economics

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