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Turning counterfeiting into advantage: the case of a durable good monopolist

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  • Chien-Wei Wu
  • Hsien-Hung Chiu

Abstract

This article argues that the presence of nondeceptive counterfeits may benefit the monopolist of genuine products in a durable good scenario. For a monopolist selling a durable good over time, the presence of counterfeits mitigates the monopolist's incentives to lower the price in later periods because lower valuation consumers are more likely to purchase the counterfeit. While the counterfeit diminishes the demand for the genuine product, we show that, under some circumstances, the presence of counterfeits may raise the price and boost the monopolist's profit.

Suggested Citation

  • Chien-Wei Wu & Hsien-Hung Chiu, 2014. "Turning counterfeiting into advantage: the case of a durable good monopolist," Applied Economics Letters, Taylor & Francis Journals, vol. 21(16), pages 1122-1127, November.
    • Handle: RePEc:taf:apeclt:v:21:y:2014:i:16:p:1122-1127
    DOI: 10.1080/13504851.2014.912031
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    Cited by:

    1. Wu, Chien-Wei & Gong, Jyh-Chyi & Chiu, Hsien-Hung, 2016. "Duopoly competition with non-deceptive counterfeiters," International Review of Law and Economics, Elsevier, vol. 47(C), pages 33-40.

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