WIPO Journal - World Intellectual Property Organization

170 The WIPO Journal
Table 6: Distribution of benefits among different stakeholders (Oolong tea) 44
Oolong tea
Category
Baseline
Sensitivity
ε 1
.38
.38
.38
.38
.18
.76
η
1
.5
1.5
1
1
1
σ
.45
.45
.45
.76
.23
.9
κ 1
.16
.16
.16
.5
.16
.16
Landowners
(%)
.14
.09
.16
.37
.21
.09
Consumers
(%)
.46
.63
.36
.38
.42
.49
Others (%)
A comparison of benefits among different stakeholders (landowners, suppliers of other inputs, and
consumers) of Darjeeling and Oolong teas shows how the different production, marketing and consumption
and reputation aspects of the two commodities affect the proportionate share of each stakeholder. Given
that “Darjeeling” is well defined geographically, and Darjeeling tea is known for its quality reputation
both domestically and internationally, landowners of Darjeeling tea gain proportionately more compared
to smallholders of Oolong tea. The limited land supply elasticity for Darjeeling tea means that landowners
continue to receive the majority of benefits even if tea quality is enhanced (as modelled by reducing the
demand elasticity). Conversely, reducing the demand elasticity for Oolong tea increases the benefits share
to foreign consumers, the dead weight loss. These results suggest that product quality enhancement under
a GI is not an effective use of public funds for rural development. However, in the case of Oolong tea,
with a higher supply elasticity due to the more expansive and less well-defined geographical boundaries,
the share of benefits going to land owners is less than that for consumers.
Deadweight loss from using GIs
The cost of modifying existing intellectual property system /developing a new intellectual property system
to accommodate GI registration should be considered while analysing the net impact of using GIs. The
documentation of such costs is not available from all the cases. According to the Government of Hong
Kong, the cost of registering an individual GI is US$180. 45 The Tea Board of India, the responsible agency
in charge of the Darjeeling GI, has spent approximately US$200,000 over four years (2000–2004) on
legal and registration expenses, costs of hiring an international watch agency and fighting infringements
in overseas jurisdictions. This amount does not include administrative expenses including the relevant
personnel working for the Tea Board, the cost of setting up monitoring mechanisms, software development
costs, etc. 46
Given that most developing countries are resource-constrained, especially financial resources, the cost
of setting up GI system will be substantial. It is valuable then to calculate the deadweight losses from
using a GI. In the case of export goods such as Darjeeling and Oolong teas, a major portion of the consumer
benefits will accrue to foreign consumers and that foreign benefit will amount to deadweight loss from
44 ε2=1 in the analysis.
45 Hong Kong Economic and Trade Office, “Multilateral System of Notification and Registration of Geographical Indications under Article 23.4 of
the TRIPS Agreement”, Communication from Hong Kong, China, to Special Session of the Council for TRIPS, World Trade Organization, Geneva,
Switzerland (April 23, 2003), at http://www.info.gov.hk/ipd/eng/information/TN-IP-W-8.pdf (last visited 3/15/11).
46 Giovannucci et al., Guide to Geographical Indications, 2009.
(2011) 2 W.I.P.O.J., Issue 2 © 2011 Thomson Reuters (Professional) UK Limited
.40
.28
.48
.25
.37
.42