Patents for self-replicating technologies: Game theoretic analysis of genetically modified seed

This paper examines the implications of patents for farmers’ decisions to use genetically modified (GM) seed versus traditional non-GM seed. We consider a game theoretic approach employing the replicator equation to assess the conditions for farmers’ adoption decisions. The results show that farmers may choose GM seeds even when this decision leads to lower profits than using traditional seeds. This result emerges because of the self-replicating characteristic of the technology of seeds and their dispersion via acts of nature and/or intentional infringement. This result is robust across our baseline model and extended model that includes the option for farmers to intentionally infringe upon the GM seed technology. This result is also robust with respect to a wide range of initial conditions and parameter values representing economic conditions including the dispersal of the GM technology, monitoring effort, payoff of GM seed relative to traditional seed, cost of patent infringement, cost of contamination, and added cost of legally using GM seed.