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The Fashion Lottery: Cooperative Innovation in Stochastic Markets

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  • Jonathan M. Barnett
  • Gilles Grolleau
  • Sana El Harbi

Abstract

The fashion market is an anomaly: innovation is vigorous, but original producers are substantially unprotected against imitation. We account for this anomaly through a cooperative innovation model in which producers prefer an incomplete property regime that permits some imitation to alternative regimes that permit no imitation or all imitation, independent of budget constraints. A property regime that permits positive but limited levels of imitation operates as a collective insurance mechanism that alleviates the risk of recoupment failure in a market characterized by demand uncertainty, long lead times, skewed returns, and rapid product obsolescence. This model is compatible with producers' selective enforcement of intellectual property protections, privately administered quasi-copyright schemes, and institutional mechanisms that facilitate seasonal coordination of design outcomes. This model potentially generalizes to certain other markets in which innovation persists despite substantial imitation. (c) 2010 by The University of Chicago. All rights reserved.

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  • Jonathan M. Barnett & Gilles Grolleau & Sana El Harbi, 2010. "The Fashion Lottery: Cooperative Innovation in Stochastic Markets," The Journal of Legal Studies, University of Chicago Press, vol. 39(1), pages 159-200, January.
    • Handle: RePEc:ucp:jlstud:v:39:y:2010:i:1:p:159-200
    DOI: 10.1086/605726
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    References listed on IDEAS

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    Cited by:

    1. Banerjee, Dyuti & Chatterjee, Ishita, 2010. "The impact of piracy on innovation in the presence of technological and market uncertainty," Information Economics and Policy, Elsevier, vol. 22(4), pages 391-397, December.
    2. Wu, Chien-Wei & Gong, Jyh-Chyi & Chiu, Hsien-Hung, 2016. "Duopoly competition with non-deceptive counterfeiters," International Review of Law and Economics, Elsevier, vol. 47(C), pages 33-40.
    3. Banerjee, Dyuti, 2013. "Effect of piracy on innovation in the presence of network externalities," Economic Modelling, Elsevier, vol. 33(C), pages 526-532.
    4. Şirin Gizem Köse & Arzu Karaman Akgül, 2016. "Innovative Approaches in Fashion Retailing," Yildiz Social Science Review, Yildiz Technical University, vol. 2(2), pages 29-38.
    5. Castaldi, Carolina, 2018. "To trademark or not to trademark: The case of the creative and cultural industries," Research Policy, Elsevier, vol. 47(3), pages 606-616.
    6. Dmitri Kuksov & Kangkang Wang, 2013. "A Model of the "It" Products in Fashion," Marketing Science, INFORMS, vol. 32(1), pages 51-69, July.
    7. Christian Barrère & Sophie Delabruyère, 2011. "Intellectual property rights on creativity and heritage: the case of the fashion industry," European Journal of Law and Economics, Springer, vol. 32(3), pages 305-339, December.
    8. Christian Barrère & Sophie Delabruyère, 2011. "Intellectual property rights on creativity and heritage: the case of the fashion industry [Droits de propriété intellectuelle, créativité et patrimoine : le cas de la mode]," Post-Print hal-02615221, HAL.
    9. Petal Jean Hackett, 2012. "Cutting too Close? Design Protection and Innovation in Fashion Goods," CESifo Working Paper Series 3716, CESifo.

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