Fighting strategies in a market with counterfeits

Jie Zhang, L. Jeff Hong, Rachel Q. Zhang

Research output: Contribution to journalArticlepeer-review

45 Scopus citations

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.

Original languageEnglish (US)
Pages (from-to)49-66
Number of pages18
JournalAnnals of Operations Research
Volume192
Issue number1
DOIs
StatePublished - Jan 2012
Externally publishedYes

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