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Abstract

A durable good monopolist sells its branded product over two periods. In period 2, when there is entry of a counterfeiter, the branded firm may charge a high price to signal its quality. Counterfeit competition thus enables the branded firm to commit to high future price in period 2, alleviating the classic time-inconsistency problem under durable good monopoly. This can increase the branded firm-s profit by encouraging consumer purchase without delay, despite the revenue loss to the counterfeiter. Total welfare can also increase, because early purchase eliminates delay cost and consumers enjoy the good for both periods.



Item Type: MPRA Paper -

Original Title: Why Branded Firm may Benefit from Counterfeit Competition-

English Title: Why Branded Firm may Benefit from Counterfeit Competition-

Language: English-

Keywords: Counterfeits, Coase Conjecture, Quality Signaling-

Subjects: D - Microeconomics > D8 - Information, Knowledge, and Uncertainty > D82 - Asymmetric and Private Information ; Mechanism DesignL - Industrial Organization > L1 - Market Structure, Firm Strategy, and Market Performance > L11 - Production, Pricing, and Market Structure ; Size Distribution of FirmsL - Industrial Organization > L1 - Market Structure, Firm Strategy, and Market Performance > L13 - Oligopoly and Other Imperfect Markets-





Autor: Ding, Yucheng

Fuente: https://mpra.ub.uni-muenchen.de/52933/







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