Famous trademarks, snobbism and anti-dilution: An economic analysis

This dissertation challenges the common wisdom about the desirability of celebrated trademarks. Contrary to the traditional view, it argues that mega-brands are neither economic evils nor limited to imparting information about the products they adorn. The dissertation 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 dissertation 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 downward-sloping demand curves and is not limited to goods with conspicuous properties.; The dissertation has normative and descriptive implications with regard to three distinct bodies of law: price discrimination, trademark anti-dilution and trade-name law. A direct implication of this analysis is that mega-brands neither confer a monopoly nor foster price discrimination. On the contrary, they enhance competition in both the physical and intangible spheres. Further, the analysis also provides a new rational basis for one of the most nebulous doctrines in trademark law: anti-dilution. Anti-dilution law provides special protection to famous marks (but not to "regular" one) and has been unanimously enthroned as one which protects only producers but is injurious to consumers. This dissertation, on the other hand, argues that anti-dilution law 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.