Trademark protection: an economic evaluation.

Note:This paper seeks to determine the economic significance of trademark protection. The analysis covers the implications of the trademark law to consumer information, advertising and product differentiation, competitive behaviour and industry structure in the producing and the distributive trades. The author argues that trademark protection is partly responsible for strong barriers to entry of new firms into an industry. Not only does it encourage advertising and other forms of differentiation, it also serves to enforce restrictive arrangements such as exclusive distributorship, market sharing, tying, and resale price maintenance. It is also argued that through the above arrangements, trademark protection influences the structure of the distributive trades, hence their relative bargaining strength vis-a-vis the producers. The study shows further that although a trademark serves as a storehouse of information regarding a product's properties, the proliferation of trademarks may serve to confuse rather than inform the consumers. Finally, no reason has been found for associating “real" (as opposed to "fancied") differentiation with trademark protection