Publication Type
Journal Article
Version
acceptedVersion
Publication Date
3-2025
Abstract
With more products being infringed by counterfeits, anti-counterfeiting measures, such as law enforcement and consumer education, have commonly been adopted in emerging markets. In recent years, “super fakes,” i.e., counterfeits of high quality, have become popular. Super fake manufacturers’ capability to produce high-quality products inspires a new anti-counterfeiting measure: converting counterfeiters to authorized suppliers. To study the effectiveness of this anticounterfeiting measure, our paper employs a game-theoretic model to examine the interactions between a brand-name firm with its home supplier, and a counterfeiter who produces high-quality counterfeits and can be potentially converted to an authorized overseas supplier. Our results show that when the difference in production costs between the two suppliers and the discount factor of using the overseas supplier are low, the brand-name firm may not have the incentive to convert the counterfeiter due to limited cost savings and a significant brand value loss. Otherwise, the brand-name firm has the incentive to convert the counterfeiter through either dual sourcing or single sourcing. However, the brand-name firm may still fail to do so when the wholesale price required for the conversion is too high because of a large overseas market size, a low penalty from law enforcement, or a high perceived quality of the counterfeit. We demonstrate that it is easier for the brand-name firm to combat counterfeiting through conversion than by driving the counterfeiter out of the market. We also examine the impact of this anti-counterfeiting measure on consumer and social surplus, and find that it may hurt consumer surplus and does not always improve social surplus.
Keywords
anti-counterfeiting, super fakes, global operations management, game theory
Discipline
Operations and Supply Chain Management
Research Areas
Operations Management
Publication
Production and Operations Management
First Page
1
Last Page
78
ISSN
1059-1478
Identifier
10.1177/10591478251327759
Publisher
SAGE Publications
Citation
LU, Liling; FANG, Xin; GAO, Sarah Yini; and KAZAZ, Burak.
Converting counterfeiters in emerging markets to authorized suppliers: A new anti-counterfeiting measure. (2025). Production and Operations Management. 1-78.
Available at: https://ink.library.smu.edu.sg/lkcsb_research/7690
Copyright Owner and License
Authors
Creative Commons License
This work is licensed under a Creative Commons Attribution-NonCommercial-No Derivative Works 4.0 International License.
Additional URL
https://doi.org/10.1177/10591478251327759
