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A Counterfeiting Game: A Vietnamese Case Study in the Motorcycle Industry

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Document pages: 17 pages

Abstract: We show how consumers react to incomplete information on product quality and examine incentives for wholesalers and retailers to provide consumers with real quality information, taking into account the market structure for motorcycle parts in Vietnam. We consider incentives of counterfeiters to support strict enforcement and indicate that they need strictness when they produce middle-quality goods. However, in Nash equilibrium between middle and low-quality producers under no enforcement, both manufacturers produce counterfeits. This results in a possibility of cooperation between authorities and counterfeiters for strict enforcement and suggests that counterfeiters do not always prefer a situation of no enforcement. These analyses by an oligopoly model are based upon field research within the real market of Vietnam.

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