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

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  • Alfaro, Laura
  • Bao, Cathy
  • Chen, Maggie
  • Hong, Junjie
  • Steinwender, Claudia
Abstract
We investigate how firms, markets, and consumer welfare 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 trademark law of 1923. Exploiting unique, newly digitized firm-employee, price, and newspaper data from Shanghai's Concession Era, we show that the trademark law, established as an unanticipated and Western-disapproved response to end foreign privileges in China, significantly reduced information friction and shaped firm dynamics and market allocation on the opposite sides of trademark conflicts. Western firms that suffered from counterfeits decreased dependence on alternative communication channels and gained market share from Japanese counterparts who were most frequently accused of counterfeiting. The reduced information friction did not result in higher brand prices as new authentic varieties emerged after the law, leading to a coexistence of trademarks and competitive markets. Quantifying the consumer welfare effect based on the empirical findings suggests a 4.2\% welfare gain from the trademark law. A comparison with previous attempts by foreign powers---such as extraterritorial rights and bilateral treaties---shows that the alternative institutions were broadly unsuccessful.

Suggested Citation

  • Alfaro, Laura & Bao, Cathy & Chen, Maggie & Hong, Junjie & Steinwender, Claudia, 2022. "Omnia Juncta in Uno: Foreign Powers and Trademark Protection in Shanghai's Concession Era," CEPR Discussion Papers 16987, C.E.P.R. Discussion Papers.
    • Handle: RePEc:cpr:ceprdp:16987
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    More about this item

    JEL classification:

    • K11 - Law and Economics - - Basic Areas of Law - - - Property Law
    • D2 - Microeconomics - - Production and Organizations
    • O1 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development
    • O3 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights
    • N4 - Economic History - - Government, War, Law, International Relations, and Regulation
    • F2 - International Economics - - International Factor Movements and International Business

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