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Foreign Counterfeiting of Status Goods

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Author Info
Gene M. Grossman
Carl Shapiro

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Abstract

We study the positive and normative effects of counterfeiting, i.e.,trademark infringement, in markets where consumers are not deceived by forgeries.The fact that consumers are willing to pay more for counterfeits than for generic merchandise of similar quality suggests that they value the prestige, or status, associated with brand-name trademarks. Counterfeiters of status goods impose a negative externality on consumers of genuine items, as fakes degrade the status associated with a given label. But counterfeits allow consumers to unbundle the status and quality attributes of the brand-name products, and alter the competition among oligopolistic trademark owners. We analyze two policies designed to combat counterfeiting: enforcement policy which increases the likelihood of confiscation of illegal items, and the imposition of a tariff on low-quality imports.

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Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 1915.

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Date of creation: Dec 1988
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Handle: RePEc:nbr:nberwo:1915

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References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
  1. Seade, J, 1985. "Profitable Cost Increases and the Shifting of Taxation : Equilibrium Response of Markets in Oligopoly," The Warwick Economics Research Paper Series (TWERPS) 260, University of Warwick, Department of Economics. [Downloadable!]
  2. Dixit, Avinash K, 1986. "Comparative Statics for Oligopoly," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 27(1), pages 107-22, February. [Downloadable!] (restricted)
  3. Bhagwati, Jagdish N & Hansen, Bent, 1973. "A Theoretical Analysis of Smuggling," The Quarterly Journal of Economics, MIT Press, vol. 87(2), pages 172-87, May. [Downloadable!] (restricted)
  4. Grossman, Gene, 1986. "Counterfeit Product Trade," CEPR Discussion Papers 103, C.E.P.R. Discussion Papers. [Downloadable!] (restricted)
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  5. Ethier, Wilfred J, 1986. "Illegal Immigration: The Host-Country Problem," American Economic Review, American Economic Association, vol. 76(1), pages 56-71, March. [Downloadable!] (restricted)
  6. Martin, Lawrence & Panagariya, Arvind, 1984. "Smuggling, trade, and price disparity: A crime-theoretic approach," Journal of International Economics, Elsevier, vol. 17(3-4), pages 201-217, November. [Downloadable!] (restricted)
  7. Pitt, Mark M., 1981. "Smuggling and price disparity," Journal of International Economics, Elsevier, vol. 11(4), pages 447-458, November. [Downloadable!] (restricted)
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(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. Christine Greenhalgh & Padraig Dixon, 2002. "The Economics of Intellectual Property: A Review to Identify Themes for Future Research," Economics Series Working Papers 135, University of Oxford, Department of Economics. [Downloadable!]
    Other versions:
  2. Luuk Van Kempen, 2003. "Fooling the eye of the beholder: deceptive status signalling among the poor in developing countries," Journal of International Development, John Wiley & Sons, Ltd., vol. 15(2), pages 157-177. [Downloadable!]
  3. Pierre-Jean Benghozi & Walter Santagata, 2001. "Market Piracy in the Design-Based Industry : Economics and Policy regulation," Post-Print hal-00262515_v1, HAL. [Downloadable!]
  4. Richard A. Jensen & Jerry Thursby & Marie Thursby, 1991. "Smuggling, Camouflaging, and Market Structure," NBER Working Papers 2630, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
    Other versions:
  5. Jen-Te Yao, 2005. "Counterfeiting and an Optimal Monitoring Policy," European Journal of Law and Economics, Springer, vol. 19(1), pages 95-114, January. [Downloadable!] (restricted)
  6. Kasturi Das, 2007. "Protection of Geographical Indications: An Overview of Select Issues with Particular Reference to India," Working Papers id:1078, esocialsciences.com. [Downloadable!]
  7. Irena Vida, 2007. "Determinants of Consumer Willingness to Purchase Non-Deceptive Counterfeit Products and the European Union," Managing Global Transitions, University of Primorska, Faculty of Management Koper, vol. 5(3), pages 253-270. [Downloadable!]
  8. Safa, Mohammad Samaun & Jessica, Wang Jing, 2005. "Influential decision factors of counterfeit consumers in Shijiazhuang city of China: A Logit analysis," MPRA Paper 10672, University Library of Munich, Germany. [Downloadable!]
  9. Luigi Luini & Andrea Mangani, 2004. "Trademarks, Product Variety, and Economic Activity in Italy and Europe," Department of Economics University of Siena 422, Department of Economics, University of Siena. [Downloadable!]
  10. Roger Mason, 2000. "Conspicuous consumption and the positional economy: policy and prescription since 1970," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 21(3-4), pages 123-132. [Downloadable!]
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