When counterfeits raise the appeal of luxury brands
- 2.6k Downloads
Counterfeiting is a widespread practice throughout the world. The conventional wisdom is that it affects branded goods negatively. In this paper, however, we suggest that counterfeiting may actually benefit certain luxury brands. By means of two studies, we show how the market presence of luxury counterfeit items can increase consumers’ willingness to pay for original brands. In Study 1, we show that the presence of luxury counterfeits can increase consumers’ willingness to pay for well-known original brands, but not for lesser-known ones. Brand awareness plays a moderating role in the positive relationship between counterfeiting and willingness to pay (WTP). In Study 2, we address the psychological mechanisms that explain this increased willingness to pay. The results show that consumers’ (a) pleasure at being envied, (b) pleasure in distinguishing themselves, and (c) perception of the quality of the original goods fully mediate the relation between the presence of counterfeit in the market and consumers’ WTP for originals. We subsequently discuss the theoretical and managerial implications of the two study results.
KeywordsFashion luxury goods Consumer behavior Counterfeiting Brand awareness Willingness to pay
The authors would like to thank the editor and the three anonymous reviewers for their useful comments and suggestions. Finally, the authors gratefully acknowledge the financial support of the MIUR Grant PRIN 2008N579SS.
- Barnett, J. M. (2005). Shopping for Gucci on Canal Street: reflections on status consumption, intellectual property, and the incentive thesis. Virginia Law Review, 91, 1381–1423.Google Scholar
- Bekir, I., El Harbi, S., & Grolleau, G. (2010). The strategy of raising counterfeiters’ costs in luxury markets. European Journal of Law and Economics. doi: 10.1007/s10657-010-9142-6.
- Business Action to Stop Counterfeiting and Piracy (2011). Estimating the global economic and social impacts of counterfeiting and piracy. Available at: http://www.iacc.org. Accessed January 10, 2012.
- Grossman, G. M., & Shapiro, C. (1988). Counterfeit-product trade. The American Economic Review, 78, 59–75.Google Scholar
- Harrison, G. W., & Rutström, E. E. (2008). Experimental Evidence on the Existence of Hypothetical Bias in Value Elicitation Methods. In C. R. Plott & V. L. Smith (Eds.), Handbook of Experimental Economics Results. Amsterdam: Elsevier.Google Scholar
- International Anticounterfeiting Coalition (2010). The truth about counterfeiting. Available at: http://www.iacc.org. Accessed January 30, 2010.
- Katz, M. L., & Shapiro, C. (2001). Network externalities, competition, and compatibility. American Economic Review, 91, 424–440.Google Scholar
- Midler, P. (2009). Poorly made in China: an insider’s account of the tactics behind China’s production game. Hoboken: Wiley.Google Scholar
- Naìm, M. (2005). Illicit: how smugglers, traffickers and copycats are hijacking the global economy. New York: Doubleday.Google Scholar
- Raustiala, K., & Sprigman, C. (2006). The piracy paradox: innovation and intellectual property in fashion design. Virginia Law Review, 92(8), 1687–1777.Google Scholar
- Ritson, M. (2007). Fakes can genuinely aid luxury brands. Marketing, 25 July.Google Scholar
- Solomon, R. C. (1993). The passions: emotions and the meaning of life. Indianapolis: Hackett.Google Scholar
- Veblen, T. (1899). The theory of leisure class. New York: Macmillan.Google Scholar
- Whitwell, S. (2006). Brand piracy: faking it can be good. Brand Strategy, 1–3.Google Scholar
- Yao, J. T. (2005). How a luxury monopolist might benefit from a stringent counterfeit monitoring regime. International Journal of Business and Economics, 4(3), 177–192.Google Scholar