Rents: The Best Defense Against Counterfeiting

Your Problem: Selling your wares sight-unseen in a foreign land with limited rule of law through unaffiliated intermediaries.

His Problem: Buying your wares of uncertain durability during an annual fair from some wandering merchant.

Your Solution: Belong to guild that enforces medieval ISO Standards, work rules, creates distinctive products requiring unique raw materials and capital goods.

In Brand Names Before the Industrial Revolution ($5), Gary Richardson argues that the "conspicuous characteristics" of durable goods produced by the end of the Middle Ages in Europe were used by their manufacturers as they would use brand-names today.

He starts with adverse selection (suppliers knowing more than consumers about the true quality of the goods), and moves to counterfeiting (highly prevalent in the middle ages and today -- tons of people in developing nations actually buy knock-off durables and pirated data instead of the "real" thing).

Enter Guilds, which were local manufacturing associations that controlled quality, and required unique production techniques that created distinctive, standardized, readily discernible outputs for consumers.

The heart of the analysis is sown from wonderfully diverse sources:

It examines the principal industries of the British Isles, continental Europe, and Levant during the thirteenth through sixteenth centuries.... Evidence comes from many sources. Court records reveal defects in manufactured merchandise. So do artifacts studied by archeologists, antique collectors, and museum curators. Legal codes reveal the structure of property rights and the effectiveness of enforcement. Other government documents – including tariff lists, tax accounts, inventories of property, and tax lists of municipal governments and the royal household – provide information about the nature of guilds, durable goods, and good names. Commercial documents illustrate the value of reputations and the mechanisms that transmitted information from craftsmen to consumers. Linguistic and literary studies confirm these conclusions. Guilds’ internal documents illuminate their goals, structure, and activities. So do returns surviving from England’s guild census of 1388.

The key consumer problem was ensuring that durable products were of the expected quality, when consumers had no voice, no insurance, and no legal recourse.

And that's just up to page 7 of 55. I look forward to the rest of the paper.


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This page contains a single entry by Kevin published on April 14, 2008 5:59 PM.

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