【公开学术报告】Optimal Channel Strategy of Luxury Brands in the Presence of Online Marketplace and Counterfeits

Date & Time: 9:30-11:00 am, Friday 1^st, November 2019

Venue: Room 2101, Tongji Building A

Language: English

Speaker：Dr. Ziqiu YE 叶梓秋 (National University of Singapore [NUS])

ABSTRACT

Rapid expansion of the online marketplace (such as Taobao.com) in the developing economies has led to many firms leveraging on this new channel to increase their access to consumers. Yet, it is also one of the main propagators of counterfeits of luxury brands. Using a dynamic game theoretic framework, we show that the authentic luxury brand shares the same channel on the online marketplace with the counterfeits when it has a relatively low production cost but a high direct channel operating cost. This is particularly when the counterfeit is suciently dierentiat from the authentic product in terms of low physical resemblance and low quality. Equivalently, the counterfeit firm can discourage the authentic firm from the online marketplace by positioning counterfeits as close substitutes either with a high level of physical resemblance or quality. The presence of the online marketplace thus overs an alternative explanation for the increasing quality of counterfeits in recent years. Our findings suggest that the authentic firm sets up its direct online channel to counter the prevalence of counterfeits in online marketplaces. Finally, the authentic luxury brand’s consideration of the online marketplace as a potential channel improves consumer surplus when the counterfeit is a su!ciently close substitute to the authentic luxury brand. This is because consumers enjoy comparable consumption or status utility from either products at competitive prices.

Keywords: Conspicuous consumption, luxury brands, counterfeits, online marketplace, channels