EconPapers    
Economics at your fingertips  
 

Biodiversity Prospecting Over Time and Under Uncertainty: A Theory of Sorts

Amitrajeet Batabyal () and Peter Nijkamp

ERSA conference papers from European Regional Science Association

Abstract: Biodiversity prospecting refers to the exploration of the commercial value of genetic and biochemical resources. In this chapter, we study a drug producing pharmaceutical firm (PF) that searches for potentially useful chemicals made by wild organisms in a conservation area. This PF is able to assign quality levels to the wild organisms in the conservation area. Organism quality is a proxy for the potential usefulness of the chemicals in an organism. At each date, our PF must decide whether to search for a new wild organism with a certain quality or to produce the drug in question with an extant wild organism with its own quality. Our theoretical analysis leads to four results. First, we show that if our PF discards a wild organism with a certain quality at a point in time then it will never use this same organism at a subsequent point in time. Second, we show that if our PF uses a particular organism with its quality at a point in time then it will continue to produce the drug with the chemicals from this organism at all later points in time. Third, we show that there is a threshold level of organism quality and that our PF's optimal policy involves using (discarding) all organisms with quality above (below) this threshold. Finally, we study the impacts of increases in an exogenous income source and the discount factor on our PF's threshold quality.

Keywords: Biodiversity Prospecting; Pharmaceutical Firm; Search; Time; Uncertainty (search for similar items in EconPapers)
JEL-codes: D81 D83 I12 (search for similar items in EconPapers)
Date: 2014-11
New Economics Papers: this item is included in nep-env
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1) Track citations by RSS feed

Downloads: (external link)
http://www-sre.wu.ac.at/ersa/ersaconfs/ersa14/e140826aFinal00901.pdf (application/pdf)

Related works:
Working Paper: Biodiversity Prospecting over Time and under Uncertainty: A Theory of Sorts (2013) Downloads
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:wiw:wiwrsa:ersa14p901

Access Statistics for this paper

More papers in ERSA conference papers from European Regional Science Association Welthandelsplatz 1, 1020 Vienna, Austria.
Bibliographic data for series maintained by Gunther Maier ().

 
Page updated 2020-09-26
Handle: RePEc:wiw:wiwrsa:ersa14p901