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Protection and Market Acceptance of Agri-Food Innovations


<OL> <LI> Protection of agri-food innovations<BR> 1A. Develop a theoretical framework to examine the interlink between the decision to license an innovation, the patent breadth decision and the decision to legally defend the patent. <BR> 1B. Develop economic experiments to empirically test the theoretical findings of objective <BR> 1C. Develop a theoretical framework to examine how innovator heterogeneity affects patenting behavior. <BR> 1D. Fine tune the two economics experiments developed by the principal investigator to study licensing behavior and run the experiments using both undergraduate students and real innovator/patent holders as subjects to gain insight into the factors that affect licensing behavior. The experiments will also allow us to test (i) whether student training(economics vs other majors) affects their decision making process and (ii) the assumption that undergraduate students are as good subjects as professionals. <BR> 1E. Develop economic experiments to empirically determine the factors that affect the patentee's decision to legally defend a patent. <BR> 1F. Determine optimal patenting strategies under various market conditions for specific agri-food innovations in the nutraceuticals and agri-food nanotechnologies areas. <LI> Market acceptance of agri-food innovations <BR> 2A. Examine consumer perceptions and attitudes towards genetically engineered nutraceuticals. <BR> 2B. Determine the market and consumer welfare effects of the introduction of agri-food nanotechnologies (e.g, active packaging, biosensors tracking bacteria and toxins, nano-size antioxidant and nutraceutical storing capsules). <BR> 2C.(i) Develop economic experiments (i.e., experimental auctions) to determine consumer willingness to pay for food with low carbon footprint, specifically focusing on low carbon beef produced through a closed-loop production system.<BR> (ii) Determine the potential market effects of the supply of low carbon beef on the demand for conventional beef as well as the resulting consumer and producer welfare effects. <BR> 2D. Examine government policies on agri-food nanotechnologies in the US and the EU and determine their market and welfare effects. </ol> The outcomes in part 1 of the project will be (1) theoretical models that demonstrate how the various patenting decisions innovators make to safeguard their innovations affect each other and how innovators' characteristics affect these decisions and (2) economic experiments that can be used to test the predictions of the theoretical models and gain further insight into the factors that affect patenting behavior. <P>
The outcomes of part 2 of the project will be (1) survey and experimental auction data that will provide information on consumer willingness to pay and purchasing attitudes towards GM nutraceuticals and low carbon beef products (2) analytical models that will assess the economic effects of policies on agri-food innovations and the market and welfare impacts of low carbon beef products.

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NON-TECHNICAL SUMMARY: To successfully compete in this globalized economy, agribusiness firms need to innovate; innovation enables firms to produce new and/or differentiated products/services that satisfy specialized consumer demands and to generate cost reducing processes to outcompete rivals in domestic and international food markets. Firms will engage in innovative activities if they are able to recoup research and development (R&D) costs and capture innovation rents so it is critical that they are able to identify the optimal strategies of protecting and profiting from their innovations. Patenting is the strongest form of protection but it does not always result in the highest possible payoffs. When should firms patent their innovations and when should they choose trade secrecy If the decision to patent is made, how broad should be the protection claimed What is the optimal decision in the case of patent infringement - to defend the patent by invoking an infringement trial or not When is licensing a patent an optimal strategy; can it be used to avoid litigation The above decisions (i.e., the decision to patent, the patent breadth decision, the decision to legally defend the patent and the decision to license it) constitute the innovator's patenting behavior. While there are a number of studies that theoretically examine some aspects of patenting behavior, a few conducted by the principal investigator, the interlink between patenting decisions is not yet fully understood. In addition, empirical research that tests theoretical findings and predictions is very limited. A main objective of this research project is to examine theoretically and empirically the interdependence that exists between the patenting decisions and determine the factors/conditions that affect which decision is optimal (i.e., the one that generates the highest economic returns). While it is important to determine how agribusiness firms can better protect their innovations, it is equally important to understand consumer responses to the introduction of food products that embody new technologies, like genetically modified (GM) foods, nutraceuticals, agri-food nanotechnology products, foods with a low carbon footprint, to name a few, into the food chain. It is consumer acceptance or opposition to these innovations (along with the appropriate form of intellectual property protection) that determine their market success and consequently firm profitability. In addition, agricultural and food policies can influence consumer attitudes and, at the same time, consumer perceptions may affect the effectiveness of certain policies. It is thus important to also understand the market and welfare effects of food policies in general and agri-food innovation policies, in particular. The project will identify optimal strategies of intellectual property (IP) protection for innovating firms in the agri-food sector, assess consumer attitudes towards agri-food products/processes that embody new technologies and examine the market and welfare effects of policies governing agri-food innovations.


APPROACH: To address objectives 1A., and 1C. in part 1 a game theoretic approach will be used. Markets for agri-food innovations are usually oligopolistic and game theory provides the tools for the study of such markets. To address objectives 1B., 1D., and 1E., in part 1 and objective 2C (i) in part 2 economics experiments will be developed. Economic experiments make use of human subjects to test, refine, or develop economic theories by allowing researchers to set up controlled situations where specific factors of interest (such as the patenting decisions) can be examined without conflicting variables present. The actions of the subjects can then be analyzed to understand their decision making process and can also be directly compared to the predictions of theory. Real motives should be provided to subjects (usually cash) that ideally should be linked to their performance in the experiments. To address objective 2C (i) in part 2 quantitative stated-preference consumer surveys and economic lab experiments (experimental auctions) will be developed and conducted to gather information on consumer willingness to pay for low carbon beef and determine potential price premiums over traditionally produced beef. To address the objectives 2B, 2D and 2C (ii) in part 2 economic models that allow for consumer heterogeneity in preferences for different food products will be used. Consumer heterogeneity is a key component in explaining the coexistence of markets for products with different process attributes (i.e., produced through different production processes and/or using different technologies). Both horizontal and vertical product differentiation models will be used to capture differences in consumer perceptions regarding food qualities and/or the safety of food innovations. I will seek approval from the Office of Research's Institutional Review Board prior to conducting the economics experiments and consumer survey research. All the protocols of informed consent, confidentiality and privacy will be followed.

Yiannaka, Amalia
University of Nebraska - Lincoln
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