Welfare Impacts of Intellectual Property Protection in the Seed Industry

Lence, Sergio H.; Hayes, Dermot J.; McCunn, Alan; Smith, Stephen; Niebur, William S.

American Journal of Agricultural Economics Vol. 87 no. 4 (November 2005): 951-968.

We examine the welfare impact of different intellectual property protection (IPP) regimes in private sector seed research and development (R&D). We take into account the period after expiration of legal IPP, and require simultaneous equilibrium in markets for R&D, seeds, and final product. Optimal IPP is remarkably insensitive to alternative parameterizations, except for R&D productivity. Results suggest that optimal IPP is greater than IPP in the U.S. seed corn market, but lower than the IPP that could be attained with genetic use restriction technologies. Optimal IPP is much higher than IPP achieved under open-pollinated crops or where legal IPP is limited.

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