Counterfeit-Product Trade

Gene Grossman and Carl Shapiro

American Economic Review, 1988, vol. 78, issue 1, 59-75

Abstract: The authors analyze trade in both legitimate and counterfeit products. Domestic firms ow n trademarks and establish reputations for delivering high-quality pr oducts in a steady-state equilibrium. Foreign suppliers export legiti mate low-quality merchandise and counterfeits of domestic brand-name merchandise. Heterogeneous home consumers either purchase low-quality imports or brand-name products, rationally expecting some degree of counterfeiting of the latter. The authors describe the positive and normative effects of counterfeiting in comparison with a no-counterfe iting benchmark. They also provide a welfare analysis of border inspe ction policy and of policy regarding the disposition of counterfeit g oods that are confiscated at the border. Copyright 1988 by American Economic Association.

Date: 1988
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Related works:
Working Paper: Counterfeit Product Trade (1986)
Working Paper: Counterfeit-Product Trade (1986)
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