A Blessing or a Curse? The Impact of Platform-led Blockchain on Counterfeiting

Authors

Lihong Cheng, University of Science and Technology of ChinaFollow
Xin Zhang, City University of Hong Kong University of Science and Technology of ChinaFollow
Xiao Shi, City University of Hong Kong University of Science and Technology of ChinaFollow

Paper Type

RIP

Paper Number

231

Abstract

Counterfeiting has long been a severe problem in online platforms. Advances in blockchain technologies have been identified as a promising solution to combat counterfeiting. However, little is known about whether the platform has incentives to deploy a blockchain system, and how different types of sellers would respond accordingly. In this study, we build a game-theoretic model to investigate the economic impact of using blockchain to combat counterfeit on different stakeholders (i.e., authentic sellers, counterfeiters, and the platform). Interestingly, we find that blockchain may benefit counterfeiters and incentivize counterfeiters to become authentic sellers. This implies that blockchain has the potential to eliminate counterfeit products from the source. Nevertheless, from the platform’s perspective, not establishing a blockchain system but condoning counterfeiting can bring more short-term profits. This finding demonstrates the tension between the platform’s economic objectives and anti-counterfeiting measures.

Recommended Citation

Cheng, Lihong; Zhang, Xin; and Shi, Xiao, "A Blessing or a Curse? The Impact of Platform-led Blockchain on Counterfeiting" (2021). PACIS 2021 Proceedings. 245.
https://aisel.aisnet.org/pacis2021/245