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How a Luxury Monopolist Might Benefit from a Stringent Counterfeit Monitoring Regime

  • Jen-Te Yao

    (Department of Economics, Aletheia University, Taiwan)

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    Most studies in the intellectual property rights literature claim that the presence of counterfeit products hurts monopolists. This paper shows that this is not always true in a market with Veblen effects where a counterfeit monitoring regime is enforced. This paper finds an effect due to intellectual property rights enforcement that may be strong enough to produce a selling price that is higher than the price chosen without counterfeiting. Consequently, the monopolist may obtain greater profits in the presence of counterfeiting than in its absence.

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    Article provided by College of Business, and College of Finance, Feng Chia University, Taichung, Taiwan in its journal International Journal of Business and Economics.

    Volume (Year): 4 (2005)
    Issue (Month): 3 (December)
    Pages: 177-192

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    Handle: RePEc:ijb:journl:v:4:y:2005:i:3:p:177-192
    Contact details of provider: Postal: 100 Wenhwa Road, Seatwen, Taichung
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    1. Matthew J. Baker & Brendan M. Cunningham, 2004. "Court Decisions and Equity Markets: Estimating the Value of Copyright Protection," Departmental Working Papers 4, United States Naval Academy Department of Economics.
    2. Bagwell, Laurie Simon & Bernheim, B Douglas, 1996. "Veblen Effects in a Theory of Conspicuous Consumption," American Economic Review, American Economic Association, vol. 86(3), pages 349-73, June.
    3. Belk, Russell W, 1988. " Possessions and the Extended Self," Journal of Consumer Research, University of Chicago Press, vol. 15(2), pages 139-68, September.
    4. Jen-Te Yao, 2005. "Counterfeiting and an Optimal Monitoring Policy," European Journal of Law and Economics, Springer, vol. 19(1), pages 95-114, January.
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