What is the Harm in Fake Luxury Brands? Moving Beyond the Conventional Wisdom

When reading the literature on counterfeit branded luxury goods (henceforth counterfeit BLGs) in both the scientific and popular press, one quickly comes across what we will summarize as the conventional wisdom. We do not mean the phrase “conventional wis-dom” to have disparaging connotations. On the contrary, this view is widely popular be-cause it makes sense and fits with common observation. The conventional wisdom holds that: a. counterfeit BLGs are a prevalent phenomenon; b. the people who buy counterfeit BLGs generally know they are purchasing fakes, and hence are not defrauded when purchasing them; c. the consumer of a fake BLG is highly unlikely to have purchased the genuine article had the fake not been available, and hence luxury goods firms do not lose a signifi-cant amount of sales from direct cannibalization by counterfeits; d. nonetheless the legitimate producers of the faked BLGs are significantly victimized by counterfeiting because the existence of fakes reduces the desirability (i.e. brand equity) of the real product among consumers who might have purchased the genu-ine article. This paper reviews published data and opinion as it applies to all four elements of the conventional view. While academic research is often criticized for confirming the obvious, we find that research on counterfeits has significantly challenged elements B, C and D of the conventional wisdom