International Journal of Business and Economics

International Journal of Business and Economics
Volume 4, No. 3

December, 2005
How a Luxury Monopolist Might Benefit from a Stringent Counterfeit Monitoring Regime
Jen-Te Yao
Department of Economics, Aletheia University, Taiwan
Most studies in the intellectual property rights literature claim that the presence of counterfeit products hurts monopolists. This paper shows that this is not always true in a market with Veblen effects where a counterfeit monitoring regime is enforced. This paper finds an effect due to intellectual property rights enforcement that may be strong enough to produce a selling price that is higher than the price chosen without counterfeiting. Consequently, the monopolist may obtain greater profits in the presence of counterfeiting than in its absence.
Keywords:intellectual property rights, counterfeiting, Veblen effects.
JEL Classifications:D42, K42, L43.