There has been considerable debate but little empirical analysis among academics, policy makers, and civil society about whether intellectual property rights would induce private research in developing countries. China passed its plant variety protection act (PVPA) in 1997 which allowed us to do some initial testing of this proposition. We used a unique data set on the seed price, area planted, morphological characteristics, and institutional sources of all the important varieties of rice in three provinces of China to estimate the impact of PVPA on seed prices and area planted to a variety. We found that protected varieties have higher prices than unprotected varieties, but that they are grown on smaller area, which means less seed is sold. Our data suggests that the increase in seed price is more than enough to compensate for the decline in demand and to pay the cost o f obtaining protection. Thus, seed companies can increase their profits by protecting new rice varieties. These results also provide some preliminary quantitative evidence to suggest that in the case of rice in China PVPA may provide some incentive for firms invest in research. However, we could not directly test whether PVPA induces more research because we do not have data on rice research expenditures by research institutes or by variety.


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