Intellectual Property Rights and Crop-Improving R&D under Adaptive Destruction, June 2007

This paper studies how the strength of intellectual property rights (IPRs) affects investments in biological innovations when the value of an innovation is stochastically reduced to zero because of the evolution of pest resistance. We frame the problem as a research and development (R&D) investment game in a duopoly model of sequential innovation. We characterize the incentives to invest in R&D under two competing IPR regimes, which differ in their treatment of the follow-on innovations that become necessary because of pest adaptation. Depending on the magnitude of the R&D cost, ex ante firms might prefer an intellectual property regime with or without a “research exemption” provision. The study of the welfare function that also accounts for benefit spillovers to consumers—which is possible analytically under some parametric conditions, and numerically otherwise—shows that the ranking of the two IPR regimes depends critically on the extent of the R&D cost.

Yhdysvaltain Presidentti Gerald R. Ford 18/11 1975

Kirje 18.11.1975

Le voyage de la France à S. Germain, avec ses plaintes à la Reine, contre le cardinal Mazarin. Et ses prières pour la Paix, & le retour de leurs Majestez à Paris, par L. B. E. S. D. G. M. O. D. R.

[Mazarinade. 1649]

Le voyage de la France à S. Germain, avec ses plaintes à la Reine, contre le cardinal Mazarin. Et ses prières pour la Paix, & le retour de leurs Majestez à Paris, par L. B. E. S. D. G. M. O. D. R.

[Mazarinade. 1649]

Speculation, risk premia and expectations in the yield curve

An affine asset pricing model in which traders have rational but heterogeneous expectations aboutfuture asset prices is developed. We use the framework to analyze the term structure of interestrates and to perform a novel three-way decomposition of bond yields into (i) average expectationsabout short rates (ii) common risk premia and (iii) a speculative component due to heterogeneousexpectations about the resale value of a bond. The speculative term is orthogonal to public informationin real time and therefore statistically distinct from common risk premia. Empirically wefind that the speculative component is quantitatively important accounting for up to a percentagepoint of yields, even in the low yield environment of the last decade. Furthermore, allowing for aspeculative component in bond yields results in estimates of historical risk premia that are morevolatile than suggested by standard Affine Gaussian term structure models which our frameworknests.

Tuomari Armas R. Taipale 12/11 1973

Kirje 12.11.1973