Document Type

Working Paper

Publication Date

3-13-2006

SSRN Discipline

LSN Subject Matter eJournals; ERPN Subject Matter eJournals; Financial Economics Network; Intellectual Property Law eJournals; Law School Research Papers - Law & Economics; Economics Research Network; Legal Scholarship Network; Entrepreneurship Research & Policy Network; Law School Research Papers - Legal Studies; Law & Society eJournals; Law & Society: Private Law eJournals; Law & Society: Public Law eJournals; Antitrust & Regulated Industries eJournals; Law School Research Papers - Public Law & Legal Theory

Abstract

Contrary to the traditional view this article argues that megabrands are neither economic evils nor limited to imparting information about the products they adorn It also rejects the view that famous marks persuade "snobs" to "irrationally" pay more for the same physical product they could have purchased for less Rather it adopts the view that in purchasing a branded good the consumer is actually purchasing a bundle of three products a physical product information about the physical product and an intangible product such as fame prestige peace of mind or a pleasant feeling This article explores the demand for the intangible product and its impact on pricing welfare and the strategies of consumers and producers It concludes that under certain conditions one may witness the anomaly of an increase in both price and output Further contrary to conspicuous goods theory this analysis shows that snobbism may occur in the traditional downwardsloping demand curves and is not limited to goods with conspicuous propertiesA direct implication of this analysis is that megabrands neither confer a monopoly nor foster price discrimination On the contrary they enhance competition in both the physical and intangible spheres Further the analysis provides a rational basis for antidilution law Antidilution law widely considered to protect producers and injure consumers actually inures to the benefit of both groups Finally this analysis shows that even snobs are rational and that there are sound economic justifications for the law's unique protection of famous marks

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