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What Does Reputation Really Assure? The Relationship of Trademarks to Expectations and Legal Remedies

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  • De Alessi, Louis
  • Staaf, Robert J

Abstract

Theoretical and empirical considerations suggest that trademarks guarantee more than just quality: they assure specific performance, that is, fulfillment of the specific terms of the contract. The specific performance hypothesis implies that a firm's investment in trademark capital varies directly with the damages that its customers expect to bear from a breach and the legal difficulties of obtaining compensation. The hypothesis also helps to explain why competitors of firms whose products are recalled lose wealth, why some damages allowed by law intentionally provide less than full compensation, and why firms who sell only to other firms also invest in trademarks. Copyright 1994 by Oxford University Press.

Suggested Citation

  • De Alessi, Louis & Staaf, Robert J, 1994. "What Does Reputation Really Assure? The Relationship of Trademarks to Expectations and Legal Remedies," Economic Inquiry, Western Economic Association International, vol. 32(3), pages 477-485, July.
    • Handle: RePEc:oup:ecinqu:v:32:y:1994:i:3:p:477-85
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    Cited by:

    1. Corey Beck & David Schap, 2015. "The Consequences of Overstating Fuel Economy," The American Economist, Sage Publications, vol. 60(1), pages 52-62, May.
    2. Giovanni B. Ramello, 2006. "What'S In A Sign ? Trademark Law And Economic Theory," Journal of Economic Surveys, Wiley Blackwell, vol. 20(4), pages 547-565, September.
    3. Plambeck, Erica L. & Taylor, Terry A., 2004. "Implications of Breach Remedy and Renegotiation for Design of Supply Contracts," Research Papers 1888, Stanford University, Graduate School of Business.
    4. Barber, Brad M & Darrough, Masako N, 1996. "Product Reliability and Firm Value: The Experience of American and Japanese Automakers, 1973-1992," Journal of Political Economy, University of Chicago Press, vol. 104(5), pages 1084-1099, October.
    5. Giovanni B. Ramello, 2008. "Semiotica, diritti e mercato. Economia del marchio nel terzo millennio," ECONOMIA E POLITICA INDUSTRIALE, FrancoAngeli Editore, vol. 2008(1), pages 107-125.
    6. Régibeau, P & Rockett, K, 2004. "The Relationship Between Intellectual Property Law and Competition Law: An Economic Approach," Economics Discussion Papers 2851, University of Essex, Department of Economics.
    7. John M. Cobin, 2014. "Rare Coin Grading: A Case of Market-Based Regulation," Cato Journal, Cato Journal, Cato Institute, vol. 34(3), pages 597-630, Fall.
    8. Cleeren, Kathleen, 2015. "Using advertising and price to mitigate losses in a product-harm crisis," Business Horizons, Elsevier, vol. 58(2), pages 157-162.
    9. Cleeren, K. & Dekimpe, M.G. & Helsen, K., 2008. "Weathering product-harm crises," Other publications TiSEM 283b51f8-dd35-4a10-930a-8, Tilburg University, School of Economics and Management.
    10. Olga Untilov & Stéphane Ganassali, 2020. "Product‐harm science communication: The halo effect and its moderators," Post-Print hal-02957579, HAL.
    11. Plambeck, Erica L. & Taylor, Terry A., 2004. "Implications of Renegotiation for Optimal Contract Flexibility and Investment," Research Papers 1889, Stanford University, Graduate School of Business.
    12. Hyun Joung Jin & Jang-Chul Kim, 2018. "Effects of the “Gangnam Style Syndrome” on the South Korean stock market," Journal of Cultural Economics, Springer;The Association for Cultural Economics International, vol. 42(1), pages 139-161, February.
    13. Tatyana Volkova, 2019. "Implementing the Potential of Intellectual Products’ Commercialisation in the International Trading System," Economy of region, Centre for Economic Security, Institute of Economics of Ural Branch of Russian Academy of Sciences, vol. 1(1), pages 242-255.
    14. Erica L. Plambeck & Terry A. Taylor, 2007. "Implications of Breach Remedy and Renegotiation Design for Innovation and Capacity," Management Science, INFORMS, vol. 53(12), pages 1859-1871, December.
    15. Olga Untilov & Stéphane Ganassali, 2020. "Product‐harm science communication: The halo effect and its moderators," Journal of Consumer Affairs, Wiley Blackwell, vol. 54(3), pages 1002-1027, September.
    16. Louis De Alessi, 1994. "Reputation and the Efficiency of Legal Rules," Cato Journal, Cato Journal, Cato Institute, vol. 14(1), pages 11-21, Spring/Su.
    17. Luigi Luini & Andrea Mangani, 2004. "Trademarks, Product Variety, and Economic Activity in Italy and Europe," Department of Economics University of Siena 422, Department of Economics, University of Siena.

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