Abstract

http://ssrn.com/abstract=2030317
 


 



Piracy versus Monopoly in the Market for Conspicuous Consumption


Michael Mandler


University of London, Royal Holloway College - Department of Economics

March 2016

Economic Journal, Forthcoming

Abstract:     
When luxury purchases signal the incomes of buyers, a monopoly will deliver signals efficiently. If competitors sell counterfeit copies of luxury goods at low prices, consumers will have to buy larger quantities or higher qualities to transmit the same signal, which wastes resources. Entrants do maximal harm when they produce indistinguishable replicas of existing luxury goods which causes prices to fall the furthest. The delivery of signals presents a trade-off: the goods that signal efficiently display a large gap between marginal cost and the price a monopoly will charge but this gap offers the greatest rewards to counterfeiting.

Number of Pages in PDF File: 25

Keywords: conspicuous consumption, piracy, separation

JEL Classification: D11, D42, D82, H21, L10


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Date posted: March 29, 2012 ; Last revised: March 23, 2016

Suggested Citation

Mandler, Michael, Piracy versus Monopoly in the Market for Conspicuous Consumption (March 2016). Economic Journal, Forthcoming. Available at SSRN: http://ssrn.com/abstract=2030317 or http://dx.doi.org/10.2139/ssrn.2030317

Contact Information

Michael Mandler (Contact Author)
University of London, Royal Holloway College - Department of Economics ( email )
Royal Holloway College
University of London
Egham, Surrey TW20 0EX
United Kingdom
+44 1784 443985 (Phone)
HOME PAGE: http://personal.rhul.ac.uk/uhte/035/
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