Intellectual Property Rights and Innovation: Evidence from the Human Genome

Abstract

Do intellectual property (IP) rights on existing technologies hinder subsequent innovation? Using newly collected data on the sequencing of the human genome by the public Human Genome Project and the private firm Celera, this paper estimates the impact of Celera’s gene-level IP on subsequent innovation. Across a range of empirical specifications, I document evidence that Celera’s IP led to reductions in subsequent scientific research and product development on the order of 20–30 percent. These results suggest that Celera’s short-term IP had persistent negative effects on subsequent innovation relative to a counterfactual of Celera genes having always been in the public domain.