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Intellectual Property Rights and Crop-Improving R&D under Adaptive Destruction

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Abstract

This paper studies how the strength of intellectual property rights (IPRs) affects investments in biological innovations when the value of an innovation is stochastically reduced to zero because of the evolution of pest resistance. We frame the problem as a research and development (R&D) investment game in a duopoly model of sequential innovation. We characterize the incentives to invest in R&D under two competing IPR regimes, which differ in their treatment of the follow-on innovations that become necessary because of pest adaptation. Depending on the magnitude of the R&D cost, ex ante firms might prefer an intellectual property regime with or without a "research exemption" provision. The study of the welfare function that also accounts for benefit spillovers to consumers-which is possible analytically under some parametric conditions, and numerically otherwise-shows that the ranking of the two IPR regimes depends critically on the extent of the R&D cost.

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  • Oleg Yerokhin & GianCarlo Moschini, 2007. "Intellectual Property Rights and Crop-Improving R&D under Adaptive Destruction," Center for Agricultural and Rural Development (CARD) Publications 07-wp449, Center for Agricultural and Rural Development (CARD) at Iowa State University.
    • Handle: RePEc:ias:cpaper:07-wp449
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    Cited by:

    1. Adrien Hervouet & Marc Baudry, 2011. "Promoting innovation in the seed market and biodiversity: the role of IPRs and commercialization rules," Post-Print hal-02012239, HAL.
    2. Derek Eaton, 2013. "Innovation and IPRs in the Agricultural Seed Sector," CIES Research Paper series 19-2013, Centre for International Environmental Studies, The Graduate Institute.
    3. Eaton, Derek, 2014. "A model of IPRs in the international supply chain of seeds and agricultural production," 2014 International Congress, August 26-29, 2014, Ljubljana, Slovenia 182643, European Association of Agricultural Economists.
    4. José Maria Ferreira Jardim Da Silveira & Vinicius Ferrari & Maria Ester S. Dal Poz, 2018. "Patentes Em Biotecnologia Agrícola: Indicador De ?Capacidade Bloqueante Legal ?(Cbl) E Estratégias De Apropriabilidade," Anais do XLIV Encontro Nacional de Economia [Proceedings of the 44th Brazilian Economics Meeting] 145, ANPEC - Associação Nacional dos Centros de Pós-Graduação em Economia [Brazilian Association of Graduate Programs in Economics].
    5. Baudry Marc & Hervouet Adrien, 2016. "Innovation in the Seed Market: The Role of IPRs and Commercialization Rules," Journal of Agricultural & Food Industrial Organization, De Gruyter, vol. 14(1), pages 51-68, May.
    6. Eaton, Derek, 2015. "Innovation and IPRs for Agricultural Crop Varieties as Intermediate Goods," 2015 Conference, August 9-14, 2015, Milan, Italy 211581, International Association of Agricultural Economists.

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    More about this item

    Keywords

    biological resistance; intellectual property rights; Markov perfect equilibrium; patents; research exemption; R&D; sequential innovation.;
    All these keywords.

    JEL classification:

    • L00 - Industrial Organization - - General - - - General
    • O31 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Innovation and Invention: Processes and Incentives
    • O34 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Intellectual Property and Intellectual Capital
    • Q28 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation - - - Government Policy

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