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What's in a sign? Trademark law and enconomic theory

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Author Info
Ramello, Giovanni ()

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Abstract

The aim of this paper is to summarise the extant theory as it relates to the economics of trademark, and to give some suggestions for further research with reference to distinct streams ofliterature. The proposed line of study inevitably looks at the complex relationship between signs and economics. Trademark is a sign introduced to remedy a market failure. It facilitates purchase decisions by indicating the provenance of the goods, so that consumers can identify specific quality attributes deriving from their own, or others', past experience. Trademark holders, on their part, have an incentive to invest in quality because they will be able to reap the benefits in terms of reputation. In other words, trademark law becomes an economic device which, opportunely designed, can produce incentives for maximising market efficiency. This role must, of course, be recognised, as a vast body of literature has done, with its many positive economic consequences. Nevertheless, trademark appears to have additional economic effects that should be properly recognized: it can determine the promotion of market power and the emergence of rent-seeking behaviours. It gives birth to an idiosyncratic economics of signs where very strong protection tends to be assured, even though the welfare effects are as yet poorly understood. In this domain much remains to be done and the challenge to researchers is open.

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Paper provided by Department of Public Policy and Public Choice - POLIS in its series P.O.L.I.S. department's Working Papers with number 67.

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Length: 29 pages
Date of creation: Mar 2006
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Handle: RePEc:uca:ucapdv:67

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Keywords: trademark; brand; economics and signs; asymmetric information; intellectual property rights; law and economics;

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Cited by:
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  1. Sáiz, J. Patricio & Fernández, Paloma, 2009. "Intangible assets and competitiveness in Spain: an approach based on trademark registration data in Catalonia (1850-1946)," Working Papers in Economic History 2009/01, Universidad Autónoma de Madrid (Spain), Department of Economic Analysis (Economic Theory and Economic History). [Downloadable!]
  2. Ramello, Giovanni B., 2008. "Semiotica, diritto e mercato. Economia del marchio nel terzo millenio," P.O.L.I.S. department's Working Papers 102, Department of Public Policy and Public Choice - POLIS. [Downloadable!]
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