Counterfeit Goods and Income Inequality

ByStefania Scandizzo

January 1, 2001

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Disclaimer: This Working Paper should not be reported as representing the views of the IMF.The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate

Summary

This paper examines the effect of counterfeit goods in a world where consumers are differentiated by level of income and innovation is quality enhancing. Counterfeit goods are defined as products with the same characteristics as “originals”, but of lower quality. The effect of imitation on firms’ profits and consumer welfare depends on the distribution of income within the country. In particular, the greater the level of income inequality the larger the increase in consumer welfare due to the imitation, and the smaller the effect on profits of the state-of-the-art firm.

Subject: Competition, Financial markets, Income distribution, Income inequality, Labor, National accounts, Personal income

Keywords: Competition, counterfeit good, counterfeit goods, follower good, Global, income distribution, Income inequality, increases consumer welfare, inequality, inequality representation, market share, Personal income, profit effect, state-of-the-art firm, vertical product differentiation, WP

Pages:
23
Volume:
2001
DOI:
---
Issue:
013
Series:
Working Paper No. 2001/013
Stock No:
WPIEA0132001
ISBN:
9781451843002
ISSN:
1018-5941

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