Aims of this chapter

This chapter will consider the legal nature of brands, their role in product differentiation and how they may affect competition and the competitiveness of firms. It will show how the legal entity of the trade mark provides the main legal platform for the marketing entity of the brand and will consider the close but nebulous relationship between these two entities. Firms and other business organisations use brands to compete with each other at the level of marketing, although the brands they use can vary considerably. Some brands provide a personable facade for the firms behind them, but some firms control a range of product-focussed brands, and some brands can appear to be distinct and autonomous entities in their own right. Despite this variety, brands have certain characteristics in common that are relevant when analysing their impact on competition and competitiveness.

This chapter will argue that brands give firms the means and an incentive to compete in terms of product quality, product development and other forms of innovation. However, it will also show how brands can enable firms to gain market power in more controversial ways and will argue that the rights of brand owners need careful calibration to provide an optimal incentive. The chapter will proceed as follows. The following section will make some general observations about branding and competition. The third section will examine the legal basis and nature of a brand. The fourth section will consider how branding has influenced the development of firms and the structuring of economic activity. The fifth section will explain how branding enables firms to provide guidance and assurance about product quality and encourages competition on this basis. The sixth section will show how branding may appeal to consumers for other reasons and encourage less beneficial forms of non-price competition. The final section will draw some conclusions.