Monopoly Power, Price Discrimination, and Access to Biotechnology Innovations

Abstract

Price discrimination and monopoly power in the provision of an intellectual property (IP) protected innovation are analyzed. A general analytical model parameterized with data from the US introduction of Bt cotton is used to examine welfare transfers from the imposition of price discrimination. When two markets are being served under a one-price policy, total welfare increases from price discrimination because monopolist gains exceed farmer losses. If only one market is being served under a one-price policy, farmers in the new market and the innovator gain, while farmer welfare in the existing market is unchanged.