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The Impact of Online Anti-Counterfeiting on Channel Structure and Pricing Decisions

Author

Listed:
  • Weiting Wang

    (School of Business Administration, Southwestern University of Finance and Economics, Chengdu 610000, China)

  • Yi Liao

    (School of Business Administration, Southwestern University of Finance and Economics, Chengdu 610000, China)

  • Wenjing Shen

    (Decision Sciences Department, LeBow College of Business, Drexel University, Philadelphia, PA 19104, USA)

Abstract

Counterfeiting is an important challenge in maintaining the security and sustainability of supply chains. This paper examines a supply chain consisting of a luxury goods manufacturer (and a retailer) in the presence of counterfeit goods. Inspired by the reality that both manufacturers and retailers have incentives to implement anti-counterfeiting, this paper combines the psychological impact of anti-counterfeiting efforts on consumers and discusses the impact of anti-counterfeiting efforts on pricing and profits. We find that: (1) anti-counterfeiting has a positive impact on the selling price of brand products and the firms’ profits. However, the impact on wholesale prices varies depending on who implements the anti-counterfeiting strategy. (2) Only when the quality of brand products is higher than the threshold, is the firm willing to input anti-counterfeiting efforts. Manufacturers in a reselling structure are more motivated to fight counterfeits. (3) Implementing anti-counterfeiting in a direct selling structure is the most effective strategy for manufacturers. Under a reselling structure, it is more beneficial for manufacturers to have the retailer input anti-counterfeiting efforts. Our study provides insights into the reasons why some manufacturers establish internal anti-counterfeiting teams under the direct selling structure, while others incentivize retailers to invest in anti-counterfeiting.

Suggested Citation

  • Weiting Wang & Yi Liao & Wenjing Shen, 2023. "The Impact of Online Anti-Counterfeiting on Channel Structure and Pricing Decisions," Sustainability, MDPI, vol. 15(10), pages 1-26, May.
    • Handle: RePEc:gam:jsusta:v:15:y:2023:i:10:p:8253-:d:1150478
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