Somogyi Róbert (Department of Finance) will present “Deceptive Counterfeits and Consumer Protection” (with Johannes Johnen and Gianmarco Luu) on March 28th, 2025, at 10:30 AM, in room QA405.
Abstract:
Deceptive counterfeits—fake products that closely mimic originals in price and appearance—are a growing concern in e-commerce, posing risks to consumers and brands. Dangerous examples include fake pharmaceuticals, electronics, and car parts that can cause serious harm. This paper develops a theoretical model to examine digital platforms’ incentives to combat such fakes. We compare two enforcement strategies: prosecuting counterfeit sellers and consumer information campaigns. While seller prosecution consistently benefits consumers, information campaigns can have unintended consequences, sometimes increasing counterfeit purchases due to price adjustments by fake sellers. Our findings provide insights into the challenges of protecting consumers in digital marketplaces.