Publication Type

Journal Article

Publication Date

12-2016

Abstract

We develop a game-theoretic model to examine the entry of copycats and its implications by incorporating two salient features; these features are two product attributes, i.e., physical resemblance and product quality, and two consumer utilities, i.e., consumption utility and status utility. Our equilibrium analysis suggests that copycats with a high physical resemblance but low product quality are more likely to successfully enter the market by defying the deterrence of the incumbent. Furthermore, we show that higher quality can prevent the copycat from successfully entering the market. Finally, we show that the entry of copycats does not always improve consumer surplus and social welfare. In particular, when the quality of the copycat is sufficiently low, the loss in status utility from consumers of the incumbent product overshadows the small gain in consumption utility from buyers of the copycat, leading to an overall decrease in consumer surplus and social welfare.

Keywords

conspicuous consumption, copycat, counterfeit, entry deterrence, entry strategies, pricing strategies

Discipline

Marketing | Strategic Management Policy

Research Areas

Operations Management

Publication

Marketing Science

Volume

36

Issue

2

First Page

272

Last Page

289

ISSN

0732-2399

Identifier

10.1287/mksc.2016.1008

Publisher

INFORMS (Institute for Operations Research and Management Sciences)

Creative Commons License

Creative Commons Attribution-Noncommercial-No Derivative Works 4.0 License
This work is licensed under a Creative Commons Attribution-Noncommercial-No Derivative Works 4.0 License.

Additional URL

http://doi.org./10.1287/mksc.2016.1008

Share

COinS