Economics of GI
Geographical Indication gives the product a distinct name, where the place of origin is attributed to the quality of the product and the resources of that origin increases the value of the product.
To enjoy the benefits of GI, the producers must belong to the following category: must belong to the demarcated geographical area and must follow the specifications associated with GI to produce the product. The good part here is, enjoyment of benefits by one producer does not come in way of enjoyment of it by the other producers. This makes the good non-rivalrous and excludable which is why it falls under the category of club goods. It acts as a barrier for those who do not fulfill the required product characteristic, inputs and techniques used to produce, etc thereby providing utmost profit to the producers.
Such products are usually developed in rural areas where it is linked with its culture, raw materials, etc. The differentiation of products leads to creation of niche markets institutionalized by collective monopoly producers present in the rural areas. The proprietary right given to the producers sustains this differentiation and it acts as a legal instrument to provide barriers for other producers. As most of these products derive from small-scale production, producers collectively devise production and marketing strategy to grow markets access and produce quality products. These products then get a distinct image, eliminating competition from production of similar products elsewhere. The producers can then increase the volume of the goods sold to increase their incomes.
GI products get market position of higher value premium good. It increases the willingness of consumers to pay more for the GI registered goods. According to a study, 43% of EU people are willing to pay 10% premium for a GI labeled product and 8% of EU people are willing to pay 20% premium for such products. Even the people in developing countries are willing to pay more for quality products as registered under GI. This increases the market reach and provides tremendous profits to the producers, thereby providing profit to the country and contributing towards its GDP.
GI is increasingly preferred for the protection of indigenous people’s knowledge and to generate high income and livelihood. GI is preferred over IPR to protect traditional knowledge due to its distinctive features such as:
· The knowledge about the product remains in public domain as nobody exclusively enjoys rights over it. While some worry of misappropriation of knowledge and exploitation of goods, it is important to note that not the entire product details are disclosed. As such, indigenous knowledge, production process, etc is protected through codified rules.
· The knowledge about the good is protected for lifetime and the rights are held in perpetuity, subject to maintenance of good-place-quality link.
· All the producers of GI produce in the demarcated geographical region. The owners cannot transfer the right of indication to producers living outside the demarcated region. This protects the cultural and traditional right of the product and limits its producers to certain class/location.
 Kasturi Das, Socio-economic implications of producing Geographical Indications in India, Centre for WTO studies, August 2009, at 19. Also refer, Dwijen Ranjnekar, The Socio Economics of Geographical Indications, UNCTAD- ICTSD Project on IPRs and Sustainable Development, May 2004.  Cerkia Bramley, Estelle Bienabe & Johann Kirsten, THE ECONOMICS OF GEOGRAPHICAL INDICATIONS: TOWARDS A CONCEPTUAL FRAMEWORK FOR GEOGRAPHICAL INDICATION RESEARCH IN DEVELOPING COUNTRIES, EIP, 109, 116-117.  Cerkia Bramley, A review of the socio-economic impact of geographical indications: considerations for the developing world, WIPO geo. Iim., June 2011, at 3-5.  Dwijen Ranjnekar, The Socio Economics of Geographical Indications, UNCTAD- ICTSD Project on IPRs and Sustainable Development, May 2004, at 17-19.