Flowers of Invention: Patent Protection and Productivity Growth in US Agriculture

Abstract

Patent protection was introduced for plant biotechnology in the United States in 1985, and it affected crops differentially depending on their reproductive structures. Exploiting this unique feature of plant physiology and a new dataset of crop-specific technology development, I find that the introduction of patent rights increased the development of novel plant varieties in affected crops. Technology development was driven by a rapid increase in private sector investment, was accompanied by positive spillover effects on innovation in certain non-biological agricultural technologies, and led to an increase in crop yields. Patent rights, however, could come with potentially significant costs to the consumers of technology and distortions to downstream production. Nevertheless, I document that in US counties that were more exposed to the change in patent law because of their crop composition, land values and profits increased. Taken together, the results suggest that the prospect of patent protection spurred technological progress and increased downstream productivity and profits.