Patents and Other Intellectual Property Rights

This article reviews intellectual property rights (IPRs), with some emphasis on the protection of agricultural and life sciences innovations. The main institutional features of IPRs are first discussed, along with a brief historical background and an articulation of the main rationale for the existence of such rights. This is followed by an overview of the principal economic issues related to IPRs. The main benefit/cost trade-offs of allowing patents and other IPRs are explained, and specific issues are then analyzed in some depth, including the scope of patent protection, the effects of patent races, and the problems arising when IPRs concern cumulative and/or complementary innovations. The economics of IPRs are further illustrated by considering instruments alternative to patents, such as prizes and government procurement contracts. The article ends with a brief discussion of some open policy issues in this area

Incentives and Outcomes in a Strategic Setting: The 3-Points-for-a-Win System in Soccer

I exploit a major structural change that has occurred in world soccer to study the impact of incentives on outcomes in a strategic setting. A game-theoretic model is developed that captures some essential strategic elements of soccer vis-à-vis the number of points awarded to a win. The observable implications of the model are tested using a large dataset that spans 30 years and 35 countries. The empirical results support the theoretical model and show that the 3-point system has led to a statistically significant increase in the expected number of goals and a decrease in the fractions of drawn matches

Discussion of U.S. Domestic Policy and U.S.-E.C. Trade

I would like to congratulate Bruce Gardner for providing a thorough and lucid presentation of the main features of U.S. agricultural policies that affect agricultural trade. His main conclusion is that U.S. commodity programs no longer increase U.S. output; if anything, they result in less U.S. output for some major commodities. Thus, the implications of these policies for trading partners such as the Economic Community (E.C.) should be reassuring. Furthermore, Gardner notes that: (1) the income of U.S. farmers no longer provides a rationale for agricultural price support because farmers have become relatively prosperous; (2) there is continuous political pressure to reduce government spending; and, (3) emerging environmental concerns may further constrain agricultural output growth. All of this reinforces his main conclusion: The tendency of (current) U.S. agricultural support policies to decrease output is very likely to persist in the future. I find myself in substantial agreement with the theses pre­ sented in this chapter. I only have minor qualifications, which I would like to discuss briefly

Production risk and the estimation of ex-ante cost functions

Cost function estimation under production uncertainty is problematic because the relevant cost is conditional on unobservable expected output. If input demand functions are also stochastic, then a nonlinear errors-in-variables model is obtained and standard estimation procedures typically fail to attain consistency. But by exploiting the full implications of the expected profit maximization hypothesis that gives rise to ex-ante cost functions, it is shown that the errors-in-variables problem can be effectively removed, and consistent estimation of the parameters of interest achieved. A Monte Carlo experiment illustrates the advantages of the proposed procedure as well as the pitfalls of other existing estimators

Mandatory GMO Labeling?

Genetically engineered (GE) crop varieties have been prominent in US agriculture for many years. First commercialized in the 1990s, they were rapidly adopted by farmers. By 2014, 93 percent of corn and 94 percent of soybean acres were planted with these varieties. Favorable reception of these products was never universal, as objections were voiced by some segments of the public; however, it seems fair to say that the acceptance of this new technology was smoother in the United States than elsewhere. This conclusion has been tested over the last few years by an increased public awareness and activism intended to bring about new legislative action on genetically modified organisms (GMOs), as GE products are often called. Such efforts have specifically aimed to introduce state-level requirements for mandatory food labeling of GMO content. Proposition 37, put to California voters in 2012, squarely aimed at mandating such labeling. Although defeated at the polls, it brought much publicity to this issue. Similar initiatives were also narrowly defeated in the states of Washington (2013) and Colorado and Oregon (2014). However, Vermont enacted mandatory GMO labeling legislation in 2014, and Maine and Connecticut have approved bills that would trigger such labeling under certain conditions (related to neighboring states also mandating GMO labeling), and several other states are considering similar actions. Are we witnessing the dawn of mandatory GMO labeling in the United States, and would that be a desirable outcome

Who is Afraid of the “Precautionary Principle”?

The recent European Union (EU) draft legislation on labeling and tracing all food and feed consisting of, containing, or produced from genetically modified (GM) organisms has the potential to significantly affect long-run U.S. agricultural exports to Europe. For the last three years, a de facto moratorium has halted approval of new GM varieties in the EU. Whereas the proposed new EU legislation may help resolve this impasse, the details of this draft legislation are raising considerable concern in the U.S. agricultural community and, if approved, are likely to give rise to a serious trade dispute within the World Trade Organization

Production Risk and the Estimation of Ex Ante Cost Functions

Cost function estimation under production uncertainty is problematic because the relevant cost is conditional on unobservable expected output. If input demand functions are also stochastic, then a nonlinear errors-in-variables model is obtained and standard estimation procedures typically fail to attain consistency. But by exploiting the full implications of the expected profit maximization hypothesis that gives rise to ex-ante cost functions, it is shown that the errors-in-variables problem can be effectively removed, and consistent estimation of the parameters of interest achieved. A Monte Carlo experiment illustrates the advantages of the proposed procedure as well as the pitfalls of other existing estimators.

Competition Issues in the Seed Industry and the Role of Intellectual Property

Research and Development (R&D) and innovation are crucial features of the seed industry. To support large R&D investments by the private sector, strong intellectual property rights, such as patents, are necessary. The exclusivity granted by patents naturally creates market power positions and raises difficult and unresolved competition issues in an antitrust context.�

Pharmaceutical and Industrial Traits in Genetically Modified Crops: Co-Existence with Conventional Agriculture

This paper discusses the implications of using genetically modified crops to biomanufacture pharmaceuticals and industrial compounds from the perspective of their co-existence with conventional agriculture. Such plant-made pharmaceuticals and plant-made industrial products rely on exciting scientific and technological breakthroughs and promise new opportunities for the agricultural sector, but they also entail novel risks. The management of the externalities and of the possible unintended economic effects that arise in this context is critical and poses difficult questions for regulators.

Incentives and Outcomes in a Strategic Setting: The 3-Points-For-A-Win System in Soccer

We exploit a major structural change that has occurred in world soccer to study the impact of incentives on outcomes in a strategic setting. A game-theoretic model is developed that captures some essential strategic elements of soccer vis-à-vis the number of points awarded to a win. The observable implications of the model are tested using a large dataset that spans 30 years and 35 countries. The empirical results support the theoretical model and show that the 3-point system has led to a statistically significant increase in the expected number of goals and a decrease in the fractions of drawn matches.Association football; Nash equilibrium; panel data; strategic incentives; supermodularity; tournaments