University Licensing of Patents for Varietal Innovations in Agriculture
Rickard, Bradley J.; Richards, Timothy J.; Yan, Jubo
There has been a sharp increase in the number of patented agricultural products from public universities in the United States. We develop an experiment to examine the revenue stream to universities from licensing plant-based innovations. In the experiment we asked subjects to bid for access for a patented input that would be used to manufacture a differentiated product; treatments were employed to solicit bids that were financed by fees, royalties, and a combination of the two mechanisms under exclusive and non-exclusive contracts. The literature studying the economics of downstream duopoly competition in quantity suggests that revenues for the innovator would be greatest under a non-exclusive contract that uses fees and royalties. In our experiment we allow more than two firms to obtain access to the patent in the non-exclusive treatments, and our empirical results suggest that innovator revenues are greatest when royalties are used alone in a non-exclusive contract.
WP 2013-19 October 2013JEL Classification Codes: L24; O32; Q16
Charles H. Dyson School of Applied Economics and Management, Cornell University
Auctions; Horticulture; Licensing; Patents; Research and Development