Edited by Hartmut Hirsch-Kreinsen and Isabel Schwinge
Chapter 5: Patterns and determinants of trademark use in Portugal
A trademark is a sign used in economic activities by a producer or vendor to identify a particular product or service, enabling consumers to differentiate between the goods or services offered in the market and recognize their origins (Ramello, 2006). Even though a trademark is not directly informative about the quality of a product, it often provides this type of information by referring to consumers' own, or others', past experience (Economides, 1988). The economic value of trademarks, therefore, derives from the fact that they can be a solution (even if an incomplete one) to the problems of asymmetric information. On the other hand, as consumers' trademark loyalty also works as a barrier to the entry of new competitors in a market, it may also cause adverse effects by supporting existent oligopolistic advantages (ibid.). Beyond their economic relevance to social welfare, trademarks have been a major focus of attention by their strong association with innovation activities. Because they are a source of visibility and reputation, trademarks become a strategic asset to firms that compete on the basis of product differentiation and customer loyalty. When successful, trademarks become associated with high perceived value to consumers and, consequently, they are a source of higher margins for the firms that register them. To the extent that trademarks help firms appropriate the returns on investments in product quality, they constitute an incentive for the introduction of new or improved goods and services in the economy (Landes and Posner, 1987; Economides, 1988).
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