The economic benefits and costs of trademarks: Lessons for the developing countries

Trademarks may be credited with social benefits to the extent they identify quality for consumers. In particular, trademarks may reduce purchase errors and the costs people bear when attempting to avoid errors. However, several forms of social costs are associated with trademarks when trademarks (and the persuasive advertising promoting them) provide the sole or major source of quality identification for the product, and when grants of exclusive use to particular product sources protect the goodwill (or monopoly) rents that attach to trademarks. To maximize benefits and minimize costs, it is suggested that identification of quality and source be separated wherever possible.