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Abstract
Small research firms developing biotechnology applications often focus on establishing intellectual
property rights (IPRs), which can then be sold to more established firms with
existing market channels. This paper presents a method for valuing the IPRs for an innovation
that lowers product production costs below those associated with the patented process of a
monopolist. The application to Glucocerebrosidase enzyme from transgenic tobacco suggests
an IPRs value of about $1.75 billion. Despite the innovator’s market power, significant
surplus gains also accrue to consumers. Further, U.S. antitrust laws that prohibit IPRs acquisition
by the current monopolist increase consumer welfare by almost 50%.