The Trade Mark and the Firm

Abstract:     
The standard justification for trade mark protection is that trade marks enhance consumer decisions and, thereby create incentives for firms to produce products of desirable qualities even when these are not observable before purchase. However this justification applies for any form of trade mark protection, regardless of whether it takes the form of a proprietary grant. Here one additional consequence of property in trade marks is described which may explain why it is socially desirable to create such property; the role of trade marks in facilitating the existence of firms created through vertical integration by contract and licensing. It suggests that when the law provides for clear property rights in trade marks, and thereby a means of putting the locus of brand control unambiguously in the hands of one entity, it encourages efficient interbrand competition by providing a neutral choice between firm integration through ownership and firm integration through relational contracting.

Number of Pages in PDF File: 8

Keywords: trade mark, protection, firm, proprietary, grant, property, brand

JEL Classification: K22

Accepted Paper Series