Impacts of Entry by Counterfeiters*

Abstract

In this paper, I use a natural experiment to test the impacts of counterfeiting under weak intellectual property rights. I collect new panel data from Chinese shoe companies from 1993-2004. Exploiting the discontinuity of government enforcement efforts for the footwear sector in 1995 and the differences in authentic companies' relationships with the government, I identify and measure the effects of counterfeit entry on authentic prices, qualities, and other market outcomes. The empirical results are explained and generalized by my theoretical framework. First, low-quality counterfeit entrants induce authentic producers to both upgrade product quality and invest in self-enforcement. Second, vertical integration and other costly devices are used for signaling and complementing a company's own enforcements against counterfeits. Third, all these strategies push up authentic prices and are effective in reducing counterfeit sales.

Cite this work

No public copy is stored for this record, so only the metadata is cited.

Stored only when both papers are in the corpus — 167 citations exist upstream.

Papers that cite the same references — the relational fallback while embeddings are still backfilling.