An Economic Analysis of Intellectual Property Rights Infringement by Koji Domon

Author:Koji Domon
Language: eng
Format: epub, pdf
Publisher: Springer International Publishing, Cham

3.3 Incomplete Information on Quality of Domestic Products

A Model

In the above section, I explained that a repair shop as an intermediary informed consumers of the real quality of domestic spare parts with fake packaging. If the explanation was perfect, market distortion by incomplete information would disappear in spite of fake packaging. This situation is just the same as that with a package with an original brand name. This subsection considers the effects of a general bad image of domestic products on a market.10 The general bad image creates incomplete information in a market and can partly explain the existence of fake packages .

A model is set up as follows. Consumers are uniformly distributed in , and market demand is expressed by length of a line in . Consumer ’s evaluation of a product is . Her or his utility function is

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