Fighting Strategies in a Market with Counterfeits

27 Pages Posted: 29 Jul 2014

See all articles by Jie Zhang

Jie Zhang

Guangdong University of Finance and Economics

L. Jeff Hong

Hong Kong University of Science & Technology (HKUST)

Rachel Zhang

Hong Kong University of Science & Technology (HKUST)

Date Written: July 2, 2010

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.

Suggested Citation

Zhang, Jie and Hong, L. Jeff and Zhang, Rachel, Fighting Strategies in a Market with Counterfeits (July 2, 2010). Annals of Operation Research, Vol. 192, No. 1, 2012, Available at SSRN: https://ssrn.com/abstract=2472633

Jie Zhang (Contact Author)

Guangdong University of Finance and Economics ( email )

21 Luntou Road
Guangzhou, Guangdong 510320
China

L. Jeff Hong

Hong Kong University of Science & Technology (HKUST) ( email )

Department of Industrial Engineering and Logistics
Hong Kong University of Science and Technology
Hong Kong, 00000 00000
Hong Kong

Rachel Zhang

Hong Kong University of Science & Technology (HKUST) ( email )

Clear Water Bay, Kowloon
Hong Kong, 999999
Hong Kong

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