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Home Publications Blogs Beat the Press People Don't Look to Buy Counterfeits, They Buy Unauthorized Copies

People Don't Look to Buy Counterfeits, They Buy Unauthorized Copies

Tuesday, 26 April 2011 19:44

In NYC there is an effort underway to fine people for buying unauthorized copies of designer products. This story mistakenly refers to these products as counterfeit. They are not counterfeit for the simple reason that there is no effort to pass them off as the real thing.

When someone hands you a counterfeit $20 bill, they do not want you know that it is not real. According to the article, the customers know full well that the designer items are not in fact the real thing but rather copies of the real thing.

This distinction is important because the customer is benefiting from this transaction. If the government prevents them from buying unauthorized copies then these customers will have to pay more to buy a similar item -- it is similar to imposing a tax. This price increase reduces customers' real wages and thereby gives them less incentive to work. 

The fact that the customer is not deceived also means that they will not be an ally in cracking down on unauthorized copies. On the other hand, if they were actually being sold counterfeit items then presumably they would be willing to assist law enforcement in cracking down on the people who ripped them off. (Thanks to CTC for the tip.)

Comments (6)Add Comment
consumer knows, but next person to see it?
written by Melissa, April 27, 2011 5:34
Isn't the point of buying a knockoff to make other people think it's real (and thus imply something untrue about your own wealth/taste)? If so, then the direct consumer may know it's fake, but everyone who sees it after that will think it's real and thus what starts as an unauthorized copy becomes a counterfeit. That hurts the brand owner because it floods the market and waters down the value of their brand image to the overall public, scarcity due to cost being a big part of what they're selling. I've never heard of anyone knowingly buying a knockoff of something they DONT display in public (a fake cusinart food processor?).
Then leave it up to the consumer
written by MartyBrentwood, April 27, 2011 7:58
A truly free market lets the consumer choose which to buy without the artificial coercion of a threat of arrest or seizure for violating patent or copyright laws. If the consumer merely wants to impress others and not process food, the knockoff cuisinart on his shelf may suffice. If he needs some intrinsic quality of the thing, if for example the "real" cuisinart actually has superior parts and workmanship compared to the knockoff, then he will want to spend more money to buy the better one. For food processors, it would probably matter; for costume jewelry it might not. Should the government role be to simply help the consumer, say in detecting fraud and testing the safety and efficacy of generic drugs, and let the consumer's informed choices help determine prices, or should it in addition enforce the artificial monopolies of patents and copyrights keep prices high?
steal this purse
written by frankenduf, April 27, 2011 8:37
this is more laughable propaganda from the fashion industry which wants market control, which one can clearly show is far more unethical on a societal scale than the schoolteacher who feels "guilty" for buying some gukki stuff- this same exact propaganda was used by the entertainment industry deperately trying to maintain control over the distribution market- remember the propaganda shorts of showing some hooded guy stealing a dvd off the shelf and equating that with a mouse button click?!- however, notice how the threats against citizens went away after a successful model of rent extraction was established, viz itunes and neflix- i don't pretend to know what the model for the fashion industry is, but rest assured if there's money in it, the "bootleggers" (another hilarious misuse of the term in the article) will be coopted by a corporation- bottom line is that history unmasks this deceptive propaganda of criminalizing citizens, and legal precedent shows that real liabilty will always be with the purveyor of an illegal act, rather than the consumer (think internet gambling- it's illegal to offer an ebet, not to lay one)
Unauthorized Copies and Price Discrimination by the Brand Provider
written by izzatzo, April 27, 2011 9:31
The market power gained from intellectual property rights results in firms creating their own 'unauthorized copies' via generic knock-offs sold at discount prices to those who won't pay full price.

It doesn't cannibilize revenues from the brand label because it's not claimed as the original as it's price discrimination designed to capture more consumer surplus under the demand curve while competing with outsider 'unauthorized copies' at the same time.
written by PeonInChief, April 27, 2011 11:44
Are these people assuming that, rather than buy an authentic Kate Spade bag, people are heading off to the street sellers to get a fake one? No, the people buying the fakes either couldn't afford the real thing, or aren't willing to spend the money for it, finding that the fake meets their needs just as well, and for much less money.

And aren't the purveyors of the overpriced originals dependent on just the cache that leads to the unauthorized copies in the first place?
written by paine, April 27, 2011 3:20
nothing could be further
from the heart
of the votin majority
then driving out copy products

what is really going on here
protection of uterly superflous
monopolist's brand rents

i have a domestic partner
really into
'only an expert can tell '
knock offs
from midnight commercial nueva york

from a fairly close inspection
these are the "real" product minus only
the official venting channels
ie they are produced in the same factories
and vented out a side door
at something closer to cost pricing

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About Beat the Press

Dean Baker is co-director of the Center for Economic and Policy Research in Washington, D.C. He is the author of several books, his latest being The End of Loser Liberalism: Making Markets Progressive. Read more about Dean.