On The Role of Trademarks: From Micro Evidence to Macro Outcomes

Emin Dinlersoz, Nathan Goldschlag, Mehmet Yorukoglu and Nikolas Zolas

Working Papers from U.S. Census Bureau, Center for Economic Studies

Abstract: What are the effects of trademarks on the U.S. economy? Evidence from comprehensive micro data on trademark registrations and outcomes for U.S. employer firms suggests that trademarks protect firm value and are linked to higher firm growth and marketing activity. Motivated by this evidence, trademarks are introduced in a general equilibrium framework to quantify their aggregate effects. Firms invest in product quality and engage in both informative and persuasive advertising to build a customer base subject to depreciation. Persuasive advertising induces a perception of higher quality. Firms can register trademarks to reduce customer depreciation and enhance product awareness. The model’s predictions about trademark registrations, firm growth, and advertising expenditures align with the empirical evidence. The analysis shows that, compared to the counterfactual economy without trademarks, the U.S. economy with trademarks generates higher average product quality but lower variety, ultimately resulting in greater welfare and higher industry concentration. While informative advertising improves welfare, persuasive advertising reduces it. Nevertheless, the positive welfare impact of trademarks outweighs the negative effects of persuasive advertising.

Pages: 67 pages
Date: 2023-03
New Economics Papers: this item is included in nep-dge and nep-ipr
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3)

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https://www2.census.gov/library/working-papers/2023/adrm/ces/CES-WP-23-16R.pdf Revised version, 2024 (application/pdf)
https://www2.census.gov/library/working-papers/2023/adrm/ces/CES-WP-23-16.pdf First version, 2023 (application/pdf)

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Persistent link: https://EconPapers.repec.org/RePEc:cen:wpaper:23-16

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