| This research investigates the economic benefits of commercially available genetically modified organisms and how biotechnology firms can most efficiently protect intellectual property (IP) contained in those plants. While profit incentives of biotechnology firms heavily depend on IP protection, protection can reduce technology utilization below the socially efficient level due to underutilization. Ownership issues are particularly problematic for intellectual property contained in self-replicating living organisms, since it is difficult for patent holders of engineered microorganisms to prove infringement. This dissertation compares contract mechanisms currently used to protect IP in plant agriculture with an optimal contract mechanism and with IP protection that might be obtained by commercial use of a biotechnological solution.; Intellectual property rights protection of reproducible biotechnology innovations is analyzed in a two-period theoretical framework that permits uncertainty and asymmetric information. The model is developed in an intertemporal setting where effects of illegal copying are evaluated. Comparison of available and possible contract mechanisms is considered to determine the most efficient contract available for both developers and users of biotechnology innovations. With a two-period model, economic effects of a biotechnological IP protection (terminator technology) are compared with various contract forms. Terminator results in highest biotech company profits, but also in lowest farmer welfare and, when cost of monitoring is small enough, also lowest social welfare.; Using the USDA-ARMS dataset, a summary of current genetically modified (GM) seed technology use in U.S. is also presented. Production effects of GM seed are estimated with a quadratic production function. Evidence of the input-saving effect of GM seed could only be found for corn using this dataset, whereas data support yield improving effects of GM seed both for soybeans and corn. A modified version of the theoretical model developed in this research is econometrically estimated using ordered probit regression. Estimation results provide insight into factors affecting farmers' decision to adopt biotechnology, and provide a test of the theoretical model. Contrary to the production function approach, empirical evidence from the structural model suggests a negative relationship between GM seed use and herbicide applications. |
