The impact of property rights' definition and enforcement vel non in agricultural biotechnology markets is one of the main areas of considerable debate. Scholars and policymakers continue to analyse the pros and cons of different legal regimes. According to this chapter, the effective protection of property rights offers adequate incentives for R&D in a biotechnology market controlled by private firms. This kind of protection was not needed in previous decades, when most of the research was in the hands of governmental or non-profit institutions. However, in the past few decades, the growth of private research and the consolidation of the private sector in multinational corporations have brought the issue of property rights to the international arena. This chapter addresses the issue of property rights protection and the incentives it generates with respect to R&D.

In order to understand the effects of different regulatory regimes, from PVPCs to patent protection, we analyse the case of corn and soybean. The case of Argentina is used because this is one of the main world producers and exporters of both soybean and corn. Also because it is the case of a developing country, it can be evaluated whether the behaviour of its private firms is the same as in developed countries. The following conclusions are obtained from the empirical case study. First, increases in market appropriation will increase investment in all varieties only if the increase in appropriation is similar for all market varieties. Changes in legislation and an increase in enforcement efforts in the early 1990s caused an increase in the number of new corn varieties, given that the legal system in Argentina provides for PVPCs for plant protection. Accordingly, soybean varieties, which need stricter property protection, like patents, did not experience such an increase in the number of new varieties. Second, more secure IPRs will lead to higher market prices for new seeds and a higher quantity supply of seeds. In the case of Argentina, prices of corn seeds were closer to those in the USA, because of the higher level of appropriation in the corn market, while prices of soybean were very low, close to the level of the black market, and much lower than those in the USA. Third, the increase in the investment in R&D in corn is positively correlated with the increase in yields, producing a convergence to the levels of yields observed in the USA. This allowed the country to increase production and exports, even when there was a substitution from corn to soybean crops, because of higher international prices for soybean. Farmers also benefited from this situation, since they could buy cheap soybean seeds in the black market and sell their crops in the international market. Fourth, even though foreign companies have the highest share of the market for seeds, a very dynamic domestic seed production sector is visible, which has evolved similarly to their foreign counterparts. This is an indication that foreign and domestic firms face similar restrictions and opportunities offered by the property right regime. Finally, we have shown how the amount of saved seeds is an important factor in the decision-making process of farmers. This evidence from farmers is very valuable since there are no studies regarding the effect of saved seed on agricultural production.

The results support the claim that property rights' definition and enforcement have important effects on the incentives of private firms in the market and on the productivity of the agricultural sector. In particular, these regulations can work well in both developed and developing countries - like Argentina - that participate significantly in world markets.

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