Intellectual property rights and the role of public and levy-funded research

Abstract

The introduction of intellectual property rights (IPRs) to protect knowledge created from agricultural research, development and extension (RD&E) has, in many instances, created strong incentive for private investment and has helped to address the chronic underfunding of agricultural RD&E. However, the privatisation of RD&E is not without its challenges given the non-rival nature of knowledge. Economic theory suggests that when protected by IPRs, knowledge becomes a toll good and creates the economic conditions for a natural monopoly. In an unregulated market, toll-good industries face the dilemma of market power in the case of monopoly, or the costly fragmentation of research effort when more than one firm exists. While this dilemma can be managed through other policies, efficient outcomes are difficult to achieve in the market place, as evidenced by the outcomes in the canola and corn hybrid seed industry. Models of levybased, industry-controlled RD&E show some promise to address these toll-good issues. The Saskatchewan Pulse Growers invests research levies on behalf of growers and manages the intellectual property (IP) produced. The Grains Research and Development Corporation (GRDC) is a shareholder along with public and private firms in three wheatbreeding firms in Australia. France has a negotiated end point royalty system. More research is needed to understand the long run impact of these alternative institutional relationships.

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