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End-Point versus Point of Sale Levying of Plant Breeding Royalties: An Economic Analysis using Optimal Control Theory

By Rodney Beard


Intellectual property rights for commercial crops have become in- creasingly controversial as plant breeders have sought to protect their investment through licensing and royalties, and farmers, in particular ecologically-oriented farmers, have promoted seed-saving as a conser- vation measure. Plant breeders have argued that seed saving reduces sales to breeders and that the imposition of royalties is necessary to maintain sales and to compensate them for the intellectual property invested in commercial varieties. These issues are explored here. In this paper, an optimal control model of seed purchase decisions in the presence of seed saving is developed. The model is used to analyze the impact of both point of sale royalties and end-point royalties on seed puchase decisions. The two approaches to levying royalties are then compared and policy conclusions drawn.

Topics: Q16 - R&D; Agricultural Technology; Biofuels; Agricultural Extension Services, C61 - Optimization Techniques; Programming Models; Dynamic Analysis, Q12 - Micro Analysis of Farm Firms, Farm Households, and Farm Input Markets
Year: 2008
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