More on Arrow & Demsetz

I concur with Chris on Amy's interesting questions. Let me add that the first mover advantage is something that probably operated more meaningfully in the early part of the 20th century, and indeed if you read the history of the industry you see practices that in essence were aimed at extending or securing that first mover advantage. But over time technology eroded that advantage, and by the time fax machines came into existence it was more or less over. Recent years have brought forth faster shipping and more nimble global supply chains, further shrinking the time gap between original and copy. So we don't see much leverage from this idea, though in the end it is an empirical question that we don't really test. Certainly future research ought to be done.

On TM, it is true that marks can be displayed visibly, and increasingly are. The other day, for instance, I saw shoes from Dolce & Gabbana with the logo on the laces themselves. And buttons with subtle marks are very common on high-end shirts and jackets. But there are limits to this practice and of course many consumers don't want labels too garishly-visible. (For readers interested in TM and fashion generally I recommend Jonathan Barnett's recent paper in the Virginia Law Review).

Here too there are terrific questions for further research, in particular one alluded to by Chris: why don't more design firms in essence knock off their own lines, through a more variegated practice of bridge lines? One answer is the erosion of the primary mark, or I suppose its tarnishment, but of course a firm could use a different label or even one that gives no indication of the original design source. A good example of the former strategy is Armani, who has several different labels at distinct price points. We are not aware of examples of the latter strategy, but would love to hear about them.