An Economic Model for Bioprospecting Contracts

43 Pages Posted: 30 Nov 2007 Last revised: 28 Mar 2015

See all articles by Helen Ding

Helen Ding

Fondazione Eni Enrico Mattei (FEEM)

Paulo A. L. D. Nunes

University of Padua - Dipartimento Territorio e Sistemi Agro Forestali (TeSAF)

Laura Onofri

Fondazione Eni Enrico Mattei (FEEM)

Date Written: November 2007

Abstract

This paper explores the use of a micro-economic model to analyse the provisions and parties of bioprospecting contracts. It focuses on the pharmaceutical industry as the representative biodiversity buyer, presenting an original theoretical framework that explains the main contract characteristics or stylised facts. Against this background, it considers the main contractors involved in these private contracts, i.e. biodiversity sellers and biodiversity buyers, analysing both the magnitude and distribution of the respective payoffs. Particular attention is devoted to the different, mixed impacts of bioprospecting contracts and patenting on social welfare. The positive welfare impacts delivered by bioprospecting contracts are associated with the potential discovery of a new drug product, i.e. productivity gains, non-monetary benefit-sharing or transfers and royalty revenues. The negative welfare impact results from the legal creation of a monopoly and the related well-known effect on the consumer surplus. Finally, the potential redistribution effects are limited, and a potential enforcement of this objective may jeopardise the desirability of the contracts since this action would lead to a significant increase in the transaction costs.

Keywords: Bioprospecting Contract, Genetic Resource, Biodiversity Buyer, Biodiversity Seller, Patenting, Welfare Analysis, Benefit Sharing

JEL Classification: D21, D23, D61, L14, Q57

Suggested Citation

Ding, Helen and Dias Nunes, Paulo Augusto and Onofri, Laura, An Economic Model for Bioprospecting Contracts (November 2007). FEEM Working Paper No. 102.2007. Available at SSRN: https://ssrn.com/abstract=1033352 or http://dx.doi.org/10.2139/ssrn.1033352

Helen Ding

Fondazione Eni Enrico Mattei (FEEM) ( email )

Isola di San Giorgio Maggiore
Venice, 30124
Italy
+39 041 2700436 (Phone)
+39 041 2700413 (Fax)

HOME PAGE: http://www.feem.it/Feem/default.htm

Paulo Augusto Dias Nunes (Contact Author)

University of Padua - Dipartimento Territorio e Sistemi Agro Forestali (TeSAF) ( email )

Legnaro, Padova 35020
Italy

Laura Onofri

Fondazione Eni Enrico Mattei (FEEM) ( email )

C.so Magenta 63
Milano, 20123
Italy

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