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Trademark Licensing in a Monopolistically Competitive Industry

Author

Listed:
  • Martin K. Perry
  • Robert H. Groff

Abstract

This article examines the efficacy of intrabrand rivalry in a monopolistically competitive industry. Intrabrand rivalry through trademark licensing would result in lower prices for consumers, but would also reduce product diversity because all brands would be less profitable. Using both the constant elasticity of substitution and the spatial models of product differentiation, we find that when fixed costs are specific to each firm, the welfare losses on product diversity dominate the welfare gains from lower prices, and consumer surplus declines. Under certain circumstances, however, trademark licensing can increase welfare when fixed costs are specific to each brand and can thus be shared among the licensed firms.

Suggested Citation

  • Martin K. Perry & Robert H. Groff, 1986. "Trademark Licensing in a Monopolistically Competitive Industry," RAND Journal of Economics, The RAND Corporation, vol. 17(2), pages 189-200, Summer.
  • Handle: RePEc:rje:randje:v:17:y:1986:i:summer:p:189-200
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    Cited by:

    1. Christine Greenhalgh & Mark Rogers, 2006. "Trade Marks and Performance in UK Firms: Evidence of Schumpeterian Competition through Innovation," Discussion Papers 06-034, Stanford Institute for Economic Policy Research.
    2. Graevenitz, Georg von, 2007. "Which Reputations Does a Brand Owner Need? Evidence from Trade Mark Opposition," Discussion Paper Series of SFB/TR 15 Governance and the Efficiency of Economic Systems 215, Free University of Berlin, Humboldt University of Berlin, University of Bonn, University of Mannheim, University of Munich.
    3. R�gibeau, P & Rockett, K, 2004. "The Relationship Between Intellectual Property Law and Competition Law: An Economic Approach," Economics Discussion Papers 2851, University of Essex, Department of Economics.

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