Source: Authors.

used to erect a barrier to entry, then the IPR is causing economic harm t o the other private agent and to society in general. An IPR that is used in this manner has ceased to be a method for society to encourage innovation and has become a private tool for preventing the development of new ideas by the owner's potential competitors. The existence of a strong IPR regime may, then, result in some organizations not having access to key production inputs and, thus, not having the "freedom to operate" in the industry. If this type of strategic behavior is employed, then it is appropriate to follow a public policy that exercises a society's right of removal.

Public policymakers face a conundrum typical of the second-best world. The IPR model, which is developed next, shows that a deadweight loss (DWL) is incurred in moving from a fully funded public research system to a private IPR driven system. An IPR that is employed strategically as described above is a barrier to entry that causes the total DWL to expand. However, given that societies are generally unwilling or unable to fully fund a public research system, an IPR-driven system is the only option. In other words, monopoly rights over intellectual property are necessary but distorting. Thus, complementary institutions need to be developed to discourage behaviors that increase the DWL and encourage behaviors that mitigate the DWL (i.e., minimize the distortion). The second part of the paper, sections 5 and 6, discusses the potential for the above-mentioned strategic behavior and the extent to which it may be present in Canada's agricultural biotechnology sector. Finally, we conclude with suggestions for institutions to improve the efficiency of an IPR regime and draw lessons for the international IPR trading system.

0 0

Post a comment