Cutting too Close? Design Protection and Innovation in Fashion Goods
AbstractContinued lobbying by high-end, American designers for intellectual property-type fashion design protection has culminated in the proposed Innovative Design Protection and Piracy Prevention Act, intended to introduce EU standards. Using a sequential, 2-firm, vertical differentiation framework, we analyze the effects of protection on investment in innovative designs by high-quality (‘designer’) and lower-quality (‘mass-market’) firms when the mass-marketer may opt to imitate, consumers prefer trendsetting designs and firms compete in prices. We show that design protection, by transforming mass-marketers from imitators to innovators, may reduce both designer profits and welfare. The model provides possible explanations for the dearth of EU case law and the increase in designer/mass-marketer collaborations.
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Bibliographic InfoPaper provided by CESifo Group Munich in its series CESifo Working Paper Series with number 3716.
Date of creation: 2012
Date of revision:
intellectual property rights; fashion design protection; imitation; licensing;
Find related papers by JEL classification:
- D21 - Microeconomics - - Production and Organizations - - - Firm Behavior: Theory
- L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets
- O31 - Economic Development, Technological Change, and Growth - - Technological Change; Research and Development; Intellectual Property Rights - - - Innovation and Invention: Processes and Incentives
- O34 - Economic Development, Technological Change, and Growth - - Technological Change; Research and Development; Intellectual Property Rights - - - Intellectual Property Rights
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