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The impact of counterfeit-purchase penalties on anti-counterfeiting under deceptive counterfeiting

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  • Yao, Jen-Te

Abstract

This paper examines the price and welfare implications of demand-side penalties in the context of deceptive counterfeiting. I show that imposing such penalties reduces demand and hence profit of the legitimate producer under some situations. When the deviation of consumer estimation errors becomes sufficiently larger, the legitimate firm has incentives to raise its product's price. Various anti-counterfeiting policies have different impacts on the firm's pricing strategy. Under uniform distribution in product quality estimation, social welfare is reduced. Consequently, counterfeit-purchase penalties employed in some countries are not recommended.

Suggested Citation

  • Yao, Jen-Te, 2015. "The impact of counterfeit-purchase penalties on anti-counterfeiting under deceptive counterfeiting," Journal of Economics and Business, Elsevier, vol. 80(C), pages 51-61.
  • Handle: RePEc:eee:jebusi:v:80:y:2015:i:c:p:51-61
    DOI: 10.1016/j.jeconbus.2015.04.002
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    References listed on IDEAS

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    5. Johnson, William R, 1985. "The Economics of Copying," Journal of Political Economy, University of Chicago Press, vol. 93(1), pages 158-174, February.
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    More about this item

    Keywords

    Deceptive counterfeiting; Purchase penalties; Intellectual property rights (IPRs);

    JEL classification:

    • K13 - Law and Economics - - Basic Areas of Law - - - Tort Law and Product Liability; Forensic Economics
    • K42 - Law and Economics - - Legal Procedure, the Legal System, and Illegal Behavior - - - Illegal Behavior and the Enforcement of Law
    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets

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