shoes, status signals and property rights

More Sole Rights

by Elaine Schwartz    •    Oct 16, 2011    •    616 Views

Should a musician be happy with file-sharing and piracy? Maybe.

According to a recent study of counterfeits, certain businesses should welcome “fakes.” The study looked at counterfeit footwear from China. Sold in the U.S., the fakes affected the real thing in 2 ways.

  • For more expensive footwear (knee-high boots were cited), the knock-offs served as advertising.
  • For the least expensive shoes, sales declined because consumers bought the counterfeit instead of the original.

The connection to music? The author of the footwear study cites the advertising value of piracy and file-sharing in the music industry.

Here, in “Sole Rights,” and here in “Fashion Rules,” econlife looks at branding.

The Economic Lesson

When free trade pact negotiators refer to their TRIPs, they are not talking about traveling. Instead, they are looking at Trade Related Intellectual Property. TRIPs discussions frequently focus on counterfeit products.

Just like a building–the physical property that a firm owns–so too can businesses claim possession of their brand, their intellectual property. Trade pacts create reciprocal intellectual property rights. They make counterfeit goods illegal for the exporter and the importer. So, TRIPs can diminish the amount of trade-related counterfeit goods.

An Economic Question: How might 18th century economist David Ricardo (1772-1823) have felt about TRIPs?

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