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Fighting strategies in a market with counterfeits

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  • Jie Zhang
  • L. Hong
  • Rachel Zhang

Abstract

Counterfeiting is a widely spread phenomenon and has seen rapid growth in recent years. In this paper, we adopt the standard vertical differentiation model and allow consumers the choices of purchasing an authentic product, purchasing a counterfeit, or not buying. We focus on how non-deceptive counterfeits, which consumers know at time of purchase that the products are counterfeits with certainty, affect the price, market share and profitability of brand name products. We also consider the strategies for brand name companies to fight counterfeiting. We compare different fighting strategies in a market with one brand name product and its counterfeit, and derive equilibrium fighting strategies in a market with two competing brand name products and a counterfeit under general conditions. Copyright Springer Science+Business Media, LLC 2012

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  • Jie Zhang & L. Hong & Rachel Zhang, 2012. "Fighting strategies in a market with counterfeits," Annals of Operations Research, Springer, vol. 192(1), pages 49-66, January.
    • Handle: RePEc:spr:annopr:v:192:y:2012:i:1:p:49-66:10.1007/s10479-010-0768-0
    DOI: 10.1007/s10479-010-0768-0
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    Cited by:

    1. He, Chao & Tan, Chunqiao & Ip, W.H. & Wu, C.H., 2023. "Combating counterfeits with the Blockchain-technology-supported platform under government enforcement," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 175(C).
    2. Meng Li & Suresh P. Sethi & Jun Zhang, 2016. "Competing with bandit supply chains," Annals of Operations Research, Springer, vol. 240(2), pages 617-640, May.
    3. Zhang, Jie & Zhang, Rachel Q., 2015. "Supply chain structure in a market with deceptive counterfeits," European Journal of Operational Research, Elsevier, vol. 240(1), pages 84-97.
    4. Marta Biancardi & Andrea Liddo & Giovanni Villani, 2020. "Fines Imposed on Counterfeiters and Pocketed by the Genuine Firm. A Differential Game Approach," Dynamic Games and Applications, Springer, vol. 10(1), pages 58-78, March.
    5. Nikolay Zenkevich & Margarita Gladkova, 2016. "Price Competition on the Market of Counterfeiting Software," International Game Theory Review (IGTR), World Scientific Publishing Co. Pte. Ltd., vol. 18(02), pages 1-10, June.
    6. Andrea Di Liddo, 2018. "Does counterfeiting benefit genuine manufacturer? The role of production costs," European Journal of Law and Economics, Springer, vol. 45(1), pages 81-125, February.
    7. Wagner, Laura & Gürbüz, Mustafa Ҫagri & Parlar, Mahmut, 2019. "Is it fake? Using potentially low quality suppliers as back-up when genuine suppliers are unavailable," International Journal of Production Economics, Elsevier, vol. 213(C), pages 185-200.
    8. Wang, Yingjia & Lin, Jiaxin & Choi, Tsan-Ming, 2020. "Gray market and counterfeiting in supply chains: A review of the operations literature and implications to luxury industries," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 133(C).
    9. Alberto Pastore, 2014. "No al falso! Un?indagine esplorativa sulle strategie anti-contraffazione delle fashion firms," MERCATI & COMPETITIVIT?, FrancoAngeli Editore, vol. 2014(2), pages 81-102.
    10. Marta Biancardi & Andrea Di Liddo & Giovanni Villani, 2022. "How do Fines and Their Enforcement on Counterfeit Products Affect Social Welfare?," Computational Economics, Springer;Society for Computational Economics, vol. 60(4), pages 1547-1573, December.
    11. Leanne L Manley & Michael C. Cant, 2015. "Attitudes of Small Business Owners towards Counterfeit Merchandise: Ethics or Survival?," Journal of Economics and Behavioral Studies, AMH International, vol. 7(4), pages 48-59.
    12. Hu, Shu & Fu, Ke & Wu, Tong, 2021. "The role of consumer behavior and power structures in coping with shoddy goods," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 155(C).
    13. Bian, Junsong & Zhang, Guoqing & Zhou, Guanghui, 2023. "The strategic impact of vertical integration on non-deceptive counterfeiting," International Journal of Production Economics, Elsevier, vol. 260(C).
    14. Soo-Haeng Cho & Xin Fang & Sridhar Tayur, 2015. "Combating Strategic Counterfeiters in Licit and Illicit Supply Chains," Manufacturing & Service Operations Management, INFORMS, vol. 17(3), pages 273-289, July.
    15. Crettez, Bertrand & Hayek, Naila & Zaccour, Georges, 2018. "Brand imitation: A dynamic-game approach," International Journal of Production Economics, Elsevier, vol. 205(C), pages 139-155.
    16. Yao, Shiqing & Zhu, Kaijie, 2020. "Combating product label misconduct: The role of traceability and market inspection," European Journal of Operational Research, Elsevier, vol. 282(2), pages 559-568.
    17. Gao, Sarah Yini & Lim, Wei Shi & Ye, Ziqiu, 2023. "Optimal channel strategy of luxury brands in the presence of online marketplace and copycats," European Journal of Operational Research, Elsevier, vol. 308(2), pages 709-721.

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