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  -