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

Oleg Yerokhin and GianCarlo Moschini

No 10008, Hebrew University of Jerusalem Archive from Hebrew University of Jerusalem

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.

Keywords: Crop Production/Industries; Research and Development/Tech Change/Emerging Technologies (search for similar items in EconPapers)
Pages: 30
Date: 2007
References: Add references at CitEc
Citations:

Downloads: (external link)
https://ageconsearch.umn.edu/record/10008/files/wp070449.pdf (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:ags:hebarc:10008

DOI: 10.22004/ag.econ.10008

Access Statistics for this paper

More papers in Hebrew University of Jerusalem Archive from Hebrew University of Jerusalem
Bibliographic data for series maintained by AgEcon Search ().