TY - JOUR AU - Grossman, Gene M AU - Shapiro, Carl TI - Foreign Counterfeiting of Status Goods JF - National Bureau of Economic Research Working Paper Series VL - No. 1915 PY - 1986 Y2 - May 1986 DO - 10.3386/w1915 UR - http://www.nber.org/papers/w1915 L1 - http://www.nber.org/papers/w1915.pdf N1 - Author contact info: Gene M. Grossman International Economics Section Department of Economics Princeton University Princeton, NJ 08544 Tel: 609/258-4823 Fax: 609/258-1374 E-Mail: grossman@princeton.edu Carl Shapiro Haas School of Business University of California, Berkeley Berkeley, CA 94720 Tel: 510/642-5905 E-Mail: cshapiro@berkeley.edu AB - We study the positive and normative effects of counterfeiting, i.e.,trademark infringement, in markets where consumers are not deceived by forgeries.The fact that consumers are willing to pay more for counterfeits than for generic merchandise of similar quality suggests that they value the prestige, or status, associated with brand-name trademarks. Counterfeiters of status goods impose a negative externality on consumers of genuine items, as fakes degrade the status associated with a given label. But counterfeits allow consumers to unbundle the status and quality attributes of the brand-name products, and alter the competition among oligopolistic trademark owners. We analyze two policies designed to combat counterfeiting: enforcement policy which increases the likelihood of confiscation of illegal items, and the imposition of a tariff on low-quality imports. ER -