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legiclmate CradlCion has been esCabllshed for public (boch at Che federal 

 and state level) support of research because of the generally weak private 

 Incentives for Innovations In general and pretechnology sciences and In som« 

 types of applied research. Furthermore, Implicit contracts have frequently 

 been worked out whereby private firms have donated useful germplasm and other 

 resources to the public sector for Its research activities In return for 

 small favors. The attempt by the public sector to regularly sell or license 

 Intellectual property for "high prices" undermines the basic foundations 

 for public support of research and previously established traditions for 

 cooperation with private firms. This is especially questionable behavior when 

 the revenues from these sales will be small relative to the size of the cost of 

 general and pretechnology scientific research. In addition, private sector 

 firms that find themselves in direct competition with public sector firms 

 for development and sale of intellectual property can legitimately complain 

 of unfair competition because public resource, which their tax revenues go 

 to support, are being used to undermine their potential profitability and 

 longevity. 



In my opinion, the proper role of public sector research is to undertake 

 research that the private sector finds unprofitable to conduct but which the 

 private sector needs for its long term development or availability of new 

 products, processes, and technologies. I hasten to add that some may believe 

 that private R&D largely creates only private sector profits and social "bads", 

 but Evenson and I have evidence showing that private R&D does increase 

 agricultural productivity. Also, we show that firms only capture about one- 

 half of the social benefits from their research. The remainder of the benefits 

 go more generally to consumers and other producers. The main reasons are 



