Omnia Juncta in Uno: Foreign Powers and Trademark Protection in Shanghai's Concession Era

Abstract

We investigate how firms and markets adapt to trademark protection, an extensively utilized but

under-examined form of IP protection to address asymmetric information, by exploring a historical

precedent: China’s 1923 trademark law. Exploiting unique, newly digitized firm-employee,

price, and newspaper data from Shanghai’s Concession Era, we show that the trademark law, an

unanticipated and Western-disapproved response to end foreign privileges, significantly reduced

information friction and shaped firm dynamics and organization on opposite sides of trademark

conflicts. Western firms that suffered from counterfeits decreased dependence on alternative communication

channels and gained market from Japanese counterparts who were most frequently

accused of counterfeiting. The trademark law also fostered relationships with domestic intermediaries,

both within and outside the boundaries of Western firms. The increased protection led to

heterogeneous price responses and new varieties, demonstrating a coexistence of IP protection and

competitive markets. In contrast, previous institutional attempts by foreign powers were broadly

unsuccessful.

Keywords: trademark, firm dynamics, intermediaries, intellectual property institutions

JEL Classification: F2, D2, O1, O3, N4