You hear them daily: advertising pitchmen exclaiming on radio and TV that this jewelry store or that furniture retailer “saves you money by bypassing the middleman!”
Seems sensible, doesn’t it? Wholesalers and other middlemen don’t work for free; they must be paid. So if a retailer “bypasses” or “eliminates” the middleman, that retailer has “savings” that it can “pass on to you.”
But if middlemen only raise retailers’ costs, why does anyone ever use such parasites to begin with?
Simply to ask this question about middlemen is to cast doubt on the widespread myth that the dominant effect of middlemen is to raise the retail costs of goods.
It’s true that middlemen must be paid for their services. These services are valuable, however, because they reduce the final prices that consumers pay at retail.
Middlemen who fail to reduce the final price go bankrupt; these middlemen are “bypassed.” But middlemen in general reduce the costs that consumers pay at retail.
To see the value of middlemen, it’s helpful to realize that retailers themselves are middlemen. The furniture store that brags of “eliminating the middleman” by “buying direct from the factory” doesn’t itself manufacture sofas, beds and dining-room tables. That retailer specializes in acquiring inventories of furniture and assembling these inventories in locations that are convenient for you to visit (such as the strip mall down the street).
If it were generally true that middlemen raise consumers’ costs, you’d be foolish ever to buy furniture from a retailer — including the one who “eliminates the middleman.” You would be better off going directly to the factory to shop for furniture.
But you almost never do so. You buy furniture from retailers. The reason you don’t “eliminate the middleman” — the retailer — when you buy furniture is that the middleman saves you money.
To “eliminate the middleman” here would require you to rent a large truck and drive it (depending on where you live) hundreds of miles to the nearest furniture factory. The factory owner might be willing to sell to you a nightstand or chair for less money than you’d pay at retail. But this price discount likely isn’t worthwhile. Not only do you spend time and money driving to and from the factory; once at the factory, you can’t easily compare that factory’s offerings with the offerings of competing furniture producers. To make such comparisons, you’d have to get back in your truck and drive to other furniture factories.
By the time you do all this driving around, the price reduction that you get by “eliminating the middleman” won’t be worthwhile. You’ll bankrupt yourself by trying to save money!
Don Boudreaux, “Ode to the middleman”, Pittsburgh Tribune-Review, 2012-02-22.
October 24, 2016
October 15, 2016
Marmite, an almost uniquely British product, is in the headlines this week over an attempt by manufacturer Unilever to jack up prices due to the drop in the pound against the Euro. As Tim Worstall points out, this is not in any way justified because all of the inputs to the product are produced in the UK (that is, the input prices have not significantly changed regardless of how the pound is doing in terms of the Euro exchange rate):
Personally I love the stuff but even in Britain that puts me in a distinct minority.
The other amusement though comes from the action itself. For what Unilever is doing here is what we in Britain refer to, colloquially, as “taking the piss.”
Yesterday, the implications of the pound’s fall on prices and retailer margins hit home for the wider public as the country’s leading supermarket engaged in a war over prices with its highest-profile supplier of branded goods.
Either UK consumers will eat store-branded yeast extract, or they’ll pay more for Marmite, or the impact of the pound’s fall will be shared between supplier and retailer.
This is superficially plausible. Britain imports some 40% of its food and as a result of the Brexit vote the pound has fallen against other currencies. We would therefore expect to see some price rises in food items. Obviously in those imported that have to be paid for in that more expensive foreign funny money. But also in certain domestic foods which substitute for those foreign ones. So, for example, if foreign chicken rises in price then so too will British chicken as demand for it rises–people will substitute away from the more expensive foreign muck to the purer and more delightful domestic production.
However, this really doesn’t hold for Marmite.
Consumer goods giant Unilever has been accused of ‘exploiting’ British shoppers by withdrawing more than 200 much-loved products from Tesco after the supermarket refused to agree to its 10 per cent price hike. Critics claim the world’s largest consumer goods manufacturer, which makes an estimated £2billion profit a year, is ‘using Brexit as an excuse to raise prices’. The Anglo-Dutch firm, which heavily campaigned against Brexit, claims it has been forced to increase prices as a result of the falling value of the pound in the wake of the referendum.
The reason it doesn’t hold for Marmite is because it is not imported and nor are any close substitutes in any volume. Thus Unilever’s costs have not gone up in any manner at all over this. Quite the contrary in fact, the only flow, other than trivial amounts of Vegemite an Australian version of a similar thing, is of Marmite out of the UK. Meaning that Unilever’s profits on Marmite exports have risen as a result of the pound’s fall. Their costs, revenues and margins in sterling are exactly what they were for domestic sales before that slump in the pound.
The row is said to have developed when Unilever – which says it faces higher costs because of the fall in sterling – attempted to increase wholesale prices.
It’s simply not true thus the micturation extraction.
October 14, 2016
October 12, 2016
I’m far from a McDonalds fan … I darken their doors less than yearly, although I’ve had a long-running “joke” that I need to have a Big Mac at least once a year, if only to remind me why I don’t eat at McDonalds more often. But is the iconic Big Mac a victim of its own success? Has it stopped being relevant in the fast food world? Colby Cosh investigates:
The Wall Street Journal reports that a big McDonald’s franchise owner did some market research recently and stumbled upon a surprising fact: only one in five Americans of “millennial” age has ever tried a Big Mac. Those of you who follow me on Twitter know what my reaction was to this news: a paroxysm of skeptical eye-rolling.
The Big Mac might easily be described as the single most successful consumer product of the 20th century. Of all the various kinds of sandwiches that the human imagination has conceived since the lifetime of the 4th Earl of Sandwich (peace be upon him), the Big Mac might be the specific sandwich that has been prepared and eaten the most. It has a recipe that children everywhere can recite by heart. How is it possible that an entire generation has collectively skipped it, never thinking it might have some merit?
Well, whether or not I would have imagined it, the reactions I got when I asked around convinced me quickly that it is probably true. (Big surprise: a businessman’s expensively gathered information about his customer base turns out to be more accurate than some jackass’s wild guess.) Dozens of young people immediately told me that they have never tried a Big Mac. Plenty of these sandwich-spurners were careful to specify, all with evident shame, that they do visit McDonald’s often; at least one had worked there. A few correspondents had specific reasons for avoiding the Big Mac, but for the most part, the prevailing attitude toward the item seemed to be apathy, rather than hostility.
As it happens, I was raised in the boonies, and we would visit McDonald’s just a few times a year. I have to acknowledge that my fondness for Big Macs is a matter of generational and circumstantial happenstance. They are, even though I’ve certainly had a thousand of the things, still attainably glamorous — a dream of childhood now indulged at will.
Fortunately, my inherited cheapness protects me from a nightmare of special-sauce overdose. I can never order a Big Mac without an inner Presbyterian voice — Socrates’ daimon, with my grandfather’s accent — grumbling that this damned thing should really cost about $2. What the Wall Street Journal has me wondering is how long the Big Mac can remain on the menu at all, if it has really been bypassed by progress and fashion in the manner of marmalade or pickled eggs. If I knew my next Big Mac was my last — though any one might be! — I might pay more like $50.
Colby and I are of a similar generational group, but I’d probably top out at $25 for my “very last” Big Mac.
October 5, 2016
September 21, 2016
Amy Alkon on the mainspring of some (possibly many) altruistic actions:
I write about this sort of thing in Good Manners for Nice People Who Sometimes Say F*ck. It’s called “pathological altruism,” and describes deeds intended to help that actually hurt — sometimes both the helper and the person they’re trying to help:
[Dr. Barbara] Oakley notes that we are especially blind to the ill effects of over- giving when whatever we’re doing allows us to feel particularly good, virtuous, and benevolent. To keep from harming ourselves or others when we’re supposed to be helping, Oakley emphasizes the importance of checking our motives when we believe we’re doing good. “People don’t realize how narcissistic a lot of ‘helping’ can be,” she told me. “It’s all too easy for empathy and good deeds to really be about our self-image or making ourselves happy or comfortable.”
One example of this is The New York Times series on nail salons — intended to help the workers but actually keeping a number of them from being able to get work…work they were able to get before the crackdowns the NYT piece led to. From Reason‘s Jim Epstein:
Salon owners have also stopped hiring unlicensed workers, whether they’re undocumented or not. By law, every manicurist working in New York State must complete 250 hours of training at a beauty school, which costs about $1,000, and then obtain a government-issued license. This is a barrier to entry, and some aspiring manicurists can’t afford the time or tuition. There are some salon owners in the industry who, up until recently, were willing to hire them anyway because they were desperate for employees and the state rarely checked. Cuomo’s task force changed that.
Kim sponsored a state law, passed in July, that attempted to remedy the situation. The bill made it legal for nail salons to hire workers as apprentices receiving on-the-job training. After a year, they’re eligible for a state license without attending beauty school.
Few are utilizing the apprenticeship program. “It needs tweaking,” Kim admits. Despite assurances to the contrary from state officials, Kim says he’s hearing on the ground that when signing up for the program, applicants are being asked their citizenship status, which is scaring off many would-be apprentices.
Licensed workers legally working in the U.S. have also been hurt by the inspections. “Workers themselves prefer to be paid in cash, and it’s not just at nail salons,” says Kim. Salon owners have started recording every dollar that passes through their shops to avoid getting fined. The inspection task force has had “unintended consequences,” he says.
The biggest victims, however, are people like Jing Ren, the main character in the Times series. Ren, 20, is undocumented, penniless, and “recently arrived from China.” Instead of paying $1,000 for salon school, she signed on as a trainee at a shop in Long Island. By the end of the article, she’s making $65 per day in base wages.
When weaving its cartoonish tale of evil bosses and oppressed workers, the Times never considers what would happen if all of the nail salons willing to hire Jing Ren disappeared. Would future immigrants like her be better or worse off?
September 18, 2016
Rick VanSickle vents about the LCBO’s amazingly tone-deaf marketing:
Sorry, LCBO, but I don’t get you. Such a lame-o release on the birthday of our great country July 1, with paltry few Canadian wines released to celebrate our big day, and presumably a few folks out there looking to party with local wines, and then suddenly in the middle of September, you drop the big one.
What up with that? I mean, the Sept. 17 issue of the Vintages mag, with pages and pages of features on Ontario wines and the biggest selection of local wines of the year — am I missing something? Is this some sort of key date for us in Ontario and Canada?
I want to be there during your obviously very detailed board meetings to listen in on the thinking behind your planning. When you get to, say, July 1, does anyone go: “Hey, that’s Canada Day, let’s flood the aisles with great Canadian wine. It’s what the people want, the people who pay for our largesse, the people we work for.” Well, no, of course not, that’s ridiculous.
Instead, as they count down the calendar, they go: “OK, what do we have for the week of Sept. 17? Why, there’s absolutely nothing going on, so let’s make it the biggest Ontario wine release of the year! Yes, perfect!”
Of course, what does it matter anyway? It’s not like the guy down the street is doing any better because there is no guy down the street. It’s the beauty of a monopoly — guilt-free decisions because there is no wrong decision if you are the only game in town.
For example (stay with me here, we’ll get to the wine), if the government decided it was going to force a shoe-store monopoly on its populace and came to the conclusion at a big swanky retreat where such decisions are made (pure speculation) that it would be so cool to put out a big display of Converse runners at all their stores on the first day of winter. No winter boots, no mukluks, just running shoes and sandals. Wouldn’t that be hilarious? lol.
It’s funny but not really funny. We just accept that it’s wrong and carry on like a monopoly is beyond reproach, beyond accountability.
For the record, the Canada Day Vintages release featured a cover story called: South Side Story: Wines of Southern France with 12 pages of spectacular photography and enticing bottles of French wine proudly displayed with glowing reviews and effusive praise for all.
At Coyote Blog, Warren Meyer explains why many “progressives” are actually driven by very conservative ideas:
Begin with a libertarian goal that should be agreeable to most Progressives — people should be able to live the way they wish. Add a classic Progressive goal — we need more low income housing. Throw in a favored Progressive lifestyle — we want to live in high density urban settings without owning a car.
From this is born the great idea of micro-housing, or one room apartments averaging less than 150 square feet. For young folks, they are nicer versions of the dorms they just left at college, with their own bathroom and kitchenette.
Ahh, but then throw in a number of other concerns of the Progressive Left, as administered by a city government in Seattle dominated by the Progressive Left. We don’t want these poor people exploited! So we need to set minimum standards for the size and amenities of apartments. We need to make sure they are safe! So they must go through extensive design reviews. We need to respect the community! So existing residents are given the ability to comment or even veto projects. We can’t trust these evil corporations building these things on their own! So all new construction is subject to planning and zoning. But we still need to keep rents low! So maximum rents are set at a number below what can be obtained, particularly given all these other new rules.
As a result, new micro-housing development has come to a halt. A Progressive lifestyle achieving Progressive goals is killed by Progressive regulatory concerns and fears of exploitation. How about those good intentions, where did they get you?
The moral of this story comes back to the very first item I listed, that people should be able to live the way they wish. Progressives feel like they believe this, but in practice they don’t. They don’t trust individuals to make decisions for themselves, because their core philosophy is dominated by the concept of exploitation of the powerless by the powerful, which in a free society means that they view individuals as idiotic, weak-willed suckers who are easily led to their own doom by the first clever corporation that comes along.
Postscript: Here is a general lesson for on housing affordability: If you give existing homeowners and residents the right (through the political process, through zoning, through community standards) to control how other people use their property, they are always, always, always going to oppose those other people doing anything new with that property. If you destroy property rights in favor of some sort of quasi-communal ownership, as is in the case in San Francisco, you don’t get some beautiful utopia — you get stasis. You don’t get progressive experimentation, you get absolute conservatism (little c). You get the world frozen in stone, except for prices that continue to rise as no new housing is built. Which interestingly, is a theme of one of my first posts over a decade ago when I wrote that Progressives Don’t Like Capitalism Because They Are Too Conservative.
September 9, 2016
Megan McArdle explains why some Apple fans are not overjoyed at the latest iPhones:
You’ve probably been thinking to yourself, “Gee, I wish I couldn’t charge my phone while also listening to music.” Or perhaps, “Gosh, if only my headphones were more expensive, easier to lose and required frequent charging.” If so, you’re in luck. Apple’s newest iPhone, unveiled on Wednesday, lacks the familiar 3.5-millimeter headphone jack. You can listen to music through the same lightning jack that you charge the phone with, or you can shell out for wireless headphones. The internets have been … unpleased with this news.
To be fair, there are design reasons for doing this. As David Pogue writes, the old-fashioned jack is an ancient piece of technology. It’s been around for more than 50 years. “As a result,” says Pogue, “it’s bulky — and in a phone, bulk = death.”
Getting rid of this ancient titan will make for a thinner phone or leave room for a bigger battery. Taking a hole out of the phone also makes it easier to waterproof. And getting rid of the jack removes a possible point of failure, since friction isn’t good for parts.
For people who place a high value on a thin phone, this is probably a good move; they’ll switch to wireless earbuds or use the lightning jack. But there are those of us who have never dropped our phones in the sink. We replace our iPhones when the battery dies, an event that tends to occur long before the headphone jack breaks. There are people in the world who take their phones on long trips, requiring them to charge them while making work calls, and they won’t want to fumble around for splitters or adapters. Some of us do not care whether our phone is merely fashionably slender or outright anorexic. For these groups, Apple’s move represents a trivial gain for a large loss: the vital commodity that economists call option value.
Option value is basically what it sounds like. The option to do something is worth having, even if you never actually do it. That’s because it increases the range of possibility, and some of those possibilities may be better than your current alternatives. My favorite example of option value is the famous economist who told me that he had tried to argue his wife into always ordering an extra entree, one they hadn’t tried before, when they got Chinese takeout. Sure, that extra entree cost them money. And sure, they might not like it. But that entree had option value embedded in it: they might discover that they like the new entree even better than the things they usually ordered, and thereby move the whole family up to a higher valued use of their Chinese food dollars.
August 28, 2016
“Passive Guy” comments on an article in the Guardian where a female author relates her experiences of submitting the same cover letter and sample pages to 50 agents, receiving only two responses when she used her real name, but 17 when she used a male pseudonym:
The OP [original poster] admits sexist agents included both men and women. PG doesn’t know of any formal studies, but he would bet the majority of agents are women. And the majority of editors working at publishers and acquiring books are women.
There’s only one logical conclusion – female authors should avoid the sexist hellholes of traditional publishing and self-publish. Starve the biased beast. Male authors should do the same thing in a show of solidarity.
August 25, 2016
At Reason, Glenn Garvin looks at the role government subsidies had in the survival of the Cunard Line and the building of the RMS Queen Mary:
The most interesting thing about the Queen Mary, which for several decades was the largest passenger ship ever built, is not the 20-foot propellers so perfectly balanced that they could be spun with a flick of the wrist; or the 35,000 tons of metal that went into its construction; or the 10 million rivets that hold the whole thing together. It’s not even the still-mysterious question of how the ship became the springboard for the very first cheap-shot joke about Joan Collins. (Q. What’s the difference between Joan Collins and the Queen Mary? A. It takes a few tugs to get the Queen Mary out of her slip.)
No, the really special thing about the Queen Mary is that it was one of the epic government bailout boondoggles of the 20th century. In 1931, barely a year into the ship’s construction, the Cunard line went broke. The British dutifully forked over a loan of a staggering 9.5 million pounds — that’s $684 million in 2016 dollars — to keep the company afloat (dreadful pun not intended until I actually typed it). Which, as the documentary Mighty Ship at War: The Queen Mary notes, saved a whopping 2,000 jobs — at $342,000 a pop, I can only conclude that shipping lines employ a lot more neurosurgeons than I was aware — and, more importantly, England’s image: “Great Britain was at risk of losing its reputation as the world’s leading maritime nation.”
Its wide-eyed admiration of pork-slinging statecraft aside, Mighty Ship at War is a peppy and quite watchable little documentary about an oddball chapter in maritime history: the conversion of luxury liners into troop transports during World War II. When war broke out in Europe in 1939, unleashing German submarine wolfpacks on commercial shipping in the Atlantic, the cruise ships were drafted just like able-bodied men. They even got the maritime equivalent of a GI haircut, repainted a dull naval gray while their posh staterooms were ripped out to make way for towering stacks of bunks.
Even before its military makeover, Mighty Ship at War relates, the Queen Mary had found its business model remade by Europe’s gathering war clouds. Because the ship’s London-to-New York route included a stop in Cherbourg, France, it became the escape route of choice for many Jews fleeing Europe. Even families of modest means often traveled in plutocratic splendor, blowing their life savings on first-class tickets, because the Germans would confiscate any money or valuables the refugees tried to carry with them. “Give the money to the Brits, not the damn Nazis,” one refugee who made the crossing as a small child remembers his parents saying. By early 1939, every London departure of the Queen Mary was sold out.
August 22, 2016
At Techdirt, Mike Masnick uses small, easily understood words to explain why your local newspaper is cutting its own financial throat by implementing a paywall:
For many years, while some journalists (and newspaper execs) have been insisting that a paywall is “the answer” for the declining news business, we’ve been pointing out how fundamentally stupid paywalls are for the news. Without going into all of the arguments again, the short version is this: the business of newspapers has never really been “the news business” (no matter how much they insist otherwise). It’s always been the community and attention business. And in the past they were able to command such attention and build a community around news because they didn’t have much competition. But the competitive landscape for community and attention has changed (massively) thanks to the internet. And putting up a paywall makes it worse. In most cases, it’s limiting the ability of these newspapers to build communities or get attention, and actively pushing people away.
And, yes, sure, people will point to the NY Times, the Wall Street Journal and the Financial Times as proof that “paywalls work.” But earth to basically every other publication: you’re not one of those publications. The paywalls there only work because of the unique content they have, and even then they don’t work as well as most people think.
Not surprisingly, more and more newspapers that bet on paywalls are discovering that they don’t really work that well and were a waste of time and effort — and may have driven away even more readers.
In my case, I look at various newspapers for links to share with my tiny audience of regular readers. Once upon a time, I’d frequently link to the two big Minnesota newspapers, the Minneapolis Star Tribune and the St. Paul Pioneer Press, mostly because I was reading their sports pages for information about my favourite football team, but fairly often when they carried other news of interest, I’d share the link with my readers. When the Star Tribune implemented a paywall, I pretty much stopped going there (they allow 10 free articles per month, and even if I only read the odd Jim Souhan column, I’d already be beyond my limit). Given the thriving fan community for the Vikings, I barely miss the mainstream coverage (but I suspect they miss me and the thousands of other out-of-state visitors they used to get in the pre-paywall days).
August 20, 2016
Bre Payton wants Hollywood to start treating women as people:
Here’s how I imagine the pitch meeting for Ocean’s 8 went down in a smoky executive boardroom somewhere in Warner Bros.’ studio office.
Balding Male Executive #1: Gee, Colombia Pictures got loudly applauded for that lousy ‘Ghostbusters’ reboot. We could really use some nice tweets from Lena Dunham.
Male Executive #2: You know she doesn’t tweet anything herself, right?
Glasses-wearing Male Executive #3: We could just make another biopic about a queen. . .
Male Executive #2: I’ve got it! We’ll pick a well-loved film and recast all the male leads with female actors.
Balding Male Executive #1: Brilliant! And we can pay them all less because they’re ALL women.
Executive #2: I’ll make some calls.
I’m not the only one who’s sick of having studio executives from the wage-gap capital of the world mansplain feminism. As Amy Roberts points out, Hollywood seems to only be interested in throwing “cinematic slops” to women.
“In 2016, why is it that the movie industry feels as though it can only entrust a blockbuster movie to women as long as the film’s story and characters are based on already successful male ones?” she writes.
She has a point — this is Hollywood — the place where women are consistently paid less than men, the town that forgets about women the second they turn 40, the place where it’s hard for women to get roles any deeper than the shallow end of a kiddie pool, the city that hides its actresses of color.
August 10, 2016
In popular discourse, America is said to be more “pro-business” than is France. When people use this term “pro-business” they typically have in mind some vague notion of a government policy made up of low-ish taxes and not a great deal of government regulation. That is, “pro-business” is commonly used to mean a free, or free-ish, market.
But such language is mistaken.
A true free market is at its core pro-consumer. In a genuinely free-market economy, businesses are valued only insofar as they serve consumers. The performance of a genuinely free-market economy is assessed by how well it satisfies, over time, the demands of consumers spending their own money and not by how well it satisfies the demands of business owners and managers.
Obviously, because businesses are a useful – indeed, practically indispensable – means of abundantly satisfying consumers’ demands, government policies that obstruct the smooth operation of these means are undesirable. But such policies that obstruct or discourage business operations are economically undesirable not because they harm businesses but, rather, because they harm consumers.
Anyway, for all of its faults, American culture and policy are actually much less pro-business than are the culture and policy of France. If you’re really looking for a government that is deeply pro-business – one that regards the protection of existing businesses as a worthy end in and of itself – one that forcibly transfers resources from taxpayers, consumers, and other non-businesses in order to promote the material interests of existing businesses – look at France. You’ll find there what you seek. In France you’ll find one of the most business-friendly policy regimes on the face of the earth. (HT Chris Meisenzahl)
Pity the French.
Don Boudreaux, “Pity the French Consumer and Worker”, Café Hayek, 2016-06-27.
July 26, 2016
At Techdirt, Timothy Geigner predicts that the craft beer market is getting close to trademark armageddon … they’re running out of punny names they can legally use for their beer:
With all the trademark actions we’ve seen taken these past few years that have revolved around the craft beer and distilling industries, it seems like some of the other folks in the mass media are finally picking up on what I’ve been saying for at least three years: the trademark apocalypse is coming for the liquor industries. It’s sort of a strange study in how an industry can evolve, starting as something artisan built on friendly competition and morphing into exactly the kind of legal-heavy, protectionist profit-beast that seems like the very antithesis of the craft brewing concept. And it should also be instructive as to how trademark law, something of the darling of intellectual properties in its intent if not application, can quickly become a major speed bump for what is an otherwise quickly growing market.
All of this appears to have caught the eye of Sara Randazzo, blogging at the Wall Street Journal, who notes that the creatively-named craft beers that have been spewing out of microbreweries across the country may be running out of those creative names.
As today’s Wall Street Journal explores, legal disputes in the beer world are becoming the norm as new craft breweries spring up at a rate of roughly two per day. Trademark lawyers have gotten so used to the beer disputes that they are now turning on each other. Some dozen lawyers are contesting San Diego lawyer Candace Moon’s attempt to trademark the term “Craft Beer Attorney,” which she says she rightfully deserves.
Within the rest of the post, Randazzo highlights one dispute between craft brewers in order to give a sense of just how small these belligerent parties are. It’s a dispute that escaped even my radar, despite what has become something of my “beat” around Techdirt. Three professionals with day jobs decided to make a go at brewing craft beer and named their company Black Ops Brewing, the pun resting upon “hops” used in their beer, while also serving as a nod to their family members that served in the military. Three guys making beer, but the trademark dispute came almost immediately.
The problem is that once you’ve been granted a trademark, you have to defend it early and often or you’ll lose it. This means tiny companies with a couple of trademarked products are pretty much required to lawyer-up and threaten to go nuclear at the faintest hint of an infringement for fear they’ll lose the right that they’ve claimed. The gains from pursuing a possible infringement are usually tiny and the legal costs almost always outweigh any “winnings”, but the risks of not doing so are potentially huge. This is an example of a perverse incentive in law.