The Fashion Lottery: Cooperative Innovation in Stochastic Markets

55 Pages Posted: 22 Aug 2008 Last revised: 13 Nov 2013

See all articles by Jonathan Barnett

Jonathan Barnett

University of Southern California Gould School of Law

Gilles Grolleau

Montpellier SupAgro and Researcher at LAMETA

Sana El Harbi

University of Sousse (Tunisia) - Faculty of Law and Economics

Abstract

The fashion market is an anomaly: innovation is vigorous but original producers are substantially unprotected against imitation, which proliferates under an incomplete property regime consisting of strong trademark protections and weak design protections. We account for this anomaly through a "cooperative innovation" model where producers prefer an incomplete property regime that permits some imitation to alternative regimes that permit no imitation or all imitation, independent of budget constraints. A property regime that permits positive but limited levels of imitation operates as a form of group insurance that alleviates the risk of recoupment failure in a market characterized by demand uncertainty, long lead times, skewed returns and rapid product obsolescence. This risk-based model is compatible with producers' selective enforcement of intellectual-property protections, privately-administered quasi-copyright schemes, and institutional mechanisms that facilitate seasonal coordination of design outcomes. This model potentially generalizes to other markets that operate under demand uncertainty and other aggravating conditions.

Keywords: Innovation, Intellectual Property, Fashion, Apparel, Imitation, Cooperation, Coordination, Insurance, Demand Uncertainty

Suggested Citation

Barnett, Jonathan and Grolleau, Gilles and Harbi, Sana El, The Fashion Lottery: Cooperative Innovation in Stochastic Markets. USC CLEO Research Paper No. C08-17, USC Law Legal Studies Paper No. 08-21, Available at SSRN: https://ssrn.com/abstract=1241005 or http://dx.doi.org/10.2139/ssrn.1241005

Jonathan Barnett (Contact Author)

University of Southern California Gould School of Law ( email )

699 Exposition Boulevard
Los Angeles, CA 90089
United States

Gilles Grolleau

Montpellier SupAgro and Researcher at LAMETA ( email )

France

Sana El Harbi

University of Sousse (Tunisia) - Faculty of Law and Economics ( email )

rue Abdelaziz el Behi
Sousse, Sousse 4000
Tunisia

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