[mises.org] In economics, branding serves an important purpose. Brands allow people to economize on knowledge, a scarce resource. We make decisions with imperfect information, and brand labeling and trademarks help us navigate these decisions. As Thomas Sowell writes:
When you drive into a town you have never seen before and want to get some gasoline for your car or to eat a hamburger, you have no direct way of knowing what is in the gasoline that some stranger at the filling station is putting into your tank or what is in the hamburger that another stranger is cooking for you to eat at a roadside stand that you have never seen before. But, if the filling station’s sign says Chevron and the restaurant’s sign says McDonald’s, then you don’t worry about it.
He goes on to add that "brand names are substitutes for specific knowledge." |