Pricing of conspicuous products in the presence of high-similarity counterfeits

The conspicuous goods not only meet the functional needs of consumers, but also meet the needs of consumers’ social status. Some consumers, who cannot afford genuine products, seek to satisfy their needs by using counterfeits which is very similar to genuine ones but at a much lower price. Considering the existence of high-similarity counterfeits, the pricing of conspicuous goods was studied. The social utility of conspicuous goods was incorporated into the consumer utility model, and the quality level of counterfeit goods was considered, a pricing game model for genuine and counterfeit manufacturers was constructed to obtain an equilibrium. It was found that in equilibrium, as the degree of conspicuousness increases, the price and demand of genuine and counterfeit goods both increase, but the price gap between counterfeit and genuine goods gradually narrows. It is shown that when the degree of conspicuousness is higher, the counterfeit product poses a greater threat to the authentic product. With the improvement in the quality of counterfeit goods, the price and demand of genuine and counterfeit products are not monotonous. In particular, as the level of imitation quality rises, there is a case where the demand for genuine products rises and the demand for counterfeit goods decreases. This shows that under certain circumstances, the market demand for genuine products increases as the level of imitation quality rises. In addition, the impact of the entry of counterfeit products on genuine products was analyzed by comparing with the case where counterfeit products do not exist. The entry of counterfeit products into the market leads to a decline in the price and profit of genuine products, but the market demand for genuine products may actually increase under certain circumstances. When the degree of conspicuousness is higher and the quality of imitation is higher (the imitation cost efficiency is higher than a certain value), the profit loss of the genuine product is the largest.