On the price elasticity of demand for trademarks

What is the fee elasticity of demand for international trademark applications?

Understanding the fee elasticity of demand for trademarks matters because it provides insights into the economic value of trademarks relative to their costs. If firms perceive high value in trademark protection, even low application fees may significantly affect filing behavior. Additionally, these estimates are essential for policymakers and intellectual property offices to make informed decisions about fee structures and their implications for trademark activity, with lower elasticity suggesting trademarks confer substantial economic value relative to their filing costs.

We analyzed monthly panel data that cover approximately 340,000 trademark applications filed from 2004 to 2013 across 42 countries. We used econometric models to estimate the fee elasticity of demand, accounting for control variables such as GDP and monthly levels of industrial production. Our estimator set included a fixed-effects model and a least-squares dummy-variable approach to correct for dynamic panel bias.

We find that a 10-percent increase in filing fees leads to a decrease in trademark applications by 2.5 to 4.0 percent, with fee-elasticity estimates ranging from −0.25 to −0.40. These results indicate that trademarks provide significant economic value relative to their costs, as evidenced by the low fee elasticity estimates. We calculate the long-term fee elasticity as −0.334, suggesting firms adjust almost contemporaneously to changes in fees, and we also find that economic activity strongly influences trademark filings.

• Monthly international trademark applications (2004–2013) from 42 countries totaling approximately 340,000 applications
• Filing fee data (653 CHF per application) obtained from the World Intellectual Property Organization, converted to local currencies using monthly exchange rates
• GDP data (in constant international dollars) sourced from the IMF World Economic Outlook database

• Demand for trademarks is responsive to filing fees, with the price elasticity of demand being the main focus
• Variation in fees due to exchange rate fluctuations is exogenous to changes in trademark filings
• The model assumes a dynamic adjustment process where firms gradually adjust their trademark applications in response to changing fees and economic conditions