This result is due to a combination of two factors. First, the early, high-probability sites contribute more than the others to the chance of a successful outcome. As repeated failures push investigators to pick through lower-grade ore, it becomes increasingly unlikely that a hit will ever be scored. Second, even if a hit is made eventually, the shift to low-quality sources implies an increase in the expected number of trials required to make the discovery and, therefore, an increase in the expected costs of continuing the search. In sum, when search procedures can be optimized to incorporate useful prior information, high-probability sites command information rents associated with their expected contribution to the chance of success and to the avoidance of search costs.
Several insights emerge.
These qualitative conclusions are robust over large ranges of parameter values. Such figures lend support to claims that bioprospecting could be used, in certain cases, as the basis for financing biodiversity conservation. The bioprospecting model was extended to address contracting relationships between suppliers and consumers of genetic resources, in the context of a monopolistically competitive market in research leads. A functional market in genetic resources is shown to be supported only when the state of scientific knowledge is sufficiently advanced. An empirical investigation was also launched of the option value of plant genetic resources in the agricultural biotechnology industry.