Omnia Juncta in Uno: Foreign Powers and Trademark Protection in Shanghai’s Concession Era
We investigate how firms and markets adapt to trademark protection, an extensively utilized but under-examined form of IP protection to address asymmetric information, by exploring a historical precedent: China’s 1923 trademark law. Exploiting unique, newly digitized firm-employee, price, and newspaper data from Shanghai’s Concession Era, we show that the trademark law, an unanticipated and Western-disapproved response to end foreign privileges, significantly reduced information friction and shaped firm dynamics and organization on opposite sides of trademark conflicts. Western firms that suffered from counterfeits decreased dependence on alternative communication channels and gained market from Japanese counterparts who were most frequently accused of counterfeiting. The trademark law also fostered relationships with domestic intermediaries, both within and outside the boundaries of Western firms. The increased protection led to heterogeneous price responses and new varieties, demonstrating a coexistence of IP protection and competitive markets. In contrast, previous institutional attempts by foreign powers were broadly unsuccessful.
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