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The Economics of Geographical Indications

Daniela Benavente


A mamá, papá, Carolina, Octavia, Matilde y Alejandro.

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1Before joining the Graduate Institute to complete my doctoral degree, back in Chile, I worked for five years as a trade negotiator at the governmental level. I noticed then the fragile balance between economics, politics, and law, and developed early on an interest in the study of the economic impact of international trade law.

2Chile has a global reputation for the adoption of economic policies that are dictated by economic theory as first best policies, neutral to particular national economic interests, and oblivious to the competitive advantage of foreign countries. The flat tariff rate implemented across-the-board in the 1980’s and the structural fiscal surplus policy adopted at the beginning of this decade are well-known examples of this commitment. But occasionally horizontal rules produce effects that go beyond the original intended purpose, with favourable/pernicious effects on the economy or positive/negative externalities unaccounted for ex-ante.

3I would like to think that this book directly relates to this question. Theoretical in nature, this research was motivated by the on-going debates taking place at the World Trade Organization (WTO) regarding the protection of geographical indications (GIs). While some argue that, on goodwill and consumer protection grounds, the protection of GIs is necessary, others see GIs as yet another instrument of post-colonial domination. My interest lies in the economic potential of the international legal regime constructed around GIs in the Agreement on Trade-Related Aspects of Intellectual Property Rights (known as the TRIPS Agreement) of the WTO, and in making sense of the different realities that this legal regime, already 15 years old, encompasses today.

4As the economist George Akerlof put it (commenting on his Nobel Prize), “the basic method of economics, which is to emphasize some aspects of reality […] while putting blinkers on others, can leave major questions unanswered”. He added: “at the beginning of the 1960s, standard microeconomic theory was overwhelmingly based upon the perfectly competitive general equilibrium model. By the 1990s the study of this model was just one branch of economic theory. Then, standard papers in economic theory were in a very different style from now, where economic models are tailored to specific markets and specific situations. In this new style, economic theory is not just the exploration of deviations from the single model of perfect competition. Instead, in this new style, the economic model is customized to describe the salient features of reality that describe the special problem under consideration”.


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