On the price elasticity of demand for trademarks

ABSTRACT

One underexplored factor directly affecting firms’ use of trademarks relates to the fees associated with obtaining a mark. This paper provides econometric estimates of the fee elasticity of demand for trademark applications. Using a panel of monthly international trademark applications, I find that a 10-percent increase in fees leads to a 2.5–4.0-percent decrease in applications. The econometric analysis also highlights that trademark filings react strongly to economic activity. The results bear implications for literature on the value of trademarks and for the use of trademarks as innovation indicator. Specifically, low elasticity estimates suggest that trademarks provide significant economic value to their owners relative to their costs. However, one must exercise caution when comparing trademark numbers across countries to the extent that fees might differ substantially.

KEYWORDS:

• Fee
• innovation indicator
• price elasticity
• trademark value

JEL CLASSIFICATION:

• M38
• O34
• O38

Acknowledgments

WIPO provided funding for this study. The author is grateful to Carsten Fink, Georg Licht, Julio Raffo and two anonymous referees for helpful suggestions.

Disclosure statement

No potential conflict of interest was reported by the author.

Notes

¹ In common law jurisdictions, a substitution exists in the form of unregistered trademarks (usually denoted with the symbol ^TM). However, registered trademarks (denoted with the symbol ®) afford a number of benefits.

² Bert Seither, ‘Why Trademarking Makes Business Sense’, Forbes Community Voice, 27 September 2018. Available at: https://bit.ly/2RcVIW2.

³ Anecdotal evidence suggests that the cost of a trademark attorney for filing an application is in the range $1000–$2000.

⁴ Input-output tables are produced by national statistical agencies and provide detailed information about the supply and use of products in the economy, and the structure of and inter-relationships between industries.

⁵ The Benelux countries have a common trademark office and individual country figures on trademark filings are not available. Country figures have been estimated on a pro rata basis using each country’s GDP. The results are robust to the exclusion of Benelux countries from the sample.

⁶ Source: 2017 ‘World Intellectual Property Indicators’ Report by WIPO, page 98.