NATIONAL BUREAU OF ECONOMIC RESEARCH
NATIONAL BUREAU OF ECONOMIC RESEARCH

Counterfeiters: Foes or Friends? How Do Counterfeits Affect Different Product Quality Tiers?

Yi Qian

NBER Working Paper No. 16785
Issued in February 2011
NBER Program(s):   IO   PR

A key concern about counterfeits and weak intellectual property protection is that they may hamper innovation by displacing legitimate sales. This paper combines a natural policy experiment with randomized lab experiments to estimate the heterogeneous impacts of counterfeiting on the sales and consumer purchase intent related to branded products of various quality levels. I collect new product-line-level panel data (1993-2004) on Chinese shoe companies. I identify heterogeneous effects of counterfeit entry on sales of authentic products of three quality tiers, finding that counterfeits have both advertising effects for a brand and substitution effects for authentic products, additionally the effects linger for some years. The advertising effect dominates the substitution effect for high-end authentic-product sales, and the substitution effect outweighs the advertising effect for low-end product sales. The positive effect of counterfeits is most pronounced for high-fashion products (such as women’s high-leg boots and dress shoes), for shoes tailored to young customers, and for high-end products of brands not yet well-known at the time of counterfeiter entry.

download in pdf format
   (376 K)

email paper

A non-technical summary of this paper is available in the July 2011 NBER digest.  You can sign up to receive the NBER Digest by email.

This paper is available as PDF (376 K) or via email.

This paper was revised on September 23, 2013

Acknowledgments

Machine-readable bibliographic record - MARC, RIS, BibTeX

Document Object Identifier (DOI): 10.3386/w16785

Users who downloaded this paper also downloaded these:
Qian w17849 Brand Management and Strategies Against Counterfeits
Qian and Xie w16692 Investigating the Dynamic Effects of Counterfeits with a Random Changepoint Simultaneous Equation Model
Bloom, Canning, and Fink w16705 Implications of Population Aging for Economic Growth
Grossman and Shapiro w1876 Counterfeit-Product Trade
Grossman and Shapiro w1915 Foreign Counterfeiting of Status Goods
 
Publications
Activities
Meetings
Data
People
About

Support
National Bureau of Economic Research, 1050 Massachusetts Ave., Cambridge, MA 02138; 617-868-3900; email: info@nber.org

Contact Us