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Entry Of Copycats Of Luxury Brands, Sarah Yini Gao, Wei Shi Lim, Christopher S. Tang
Entry Of Copycats Of Luxury Brands, Sarah Yini Gao, Wei Shi Lim, Christopher S. Tang
Research Collection Lee Kong Chian School Of Business
We develop a game-theoretic model to examine the entry of copycats and its implications by incorporating two salient features; these features are two product attributes, i.e., physical resemblance and product quality, and two consumer utilities, i.e., consumption utility and status utility. Our equilibrium analysis suggests that copycats with a high physical resemblance but low product quality are more likely to successfully enter the market by defying the deterrence of the incumbent. Furthermore, we show that higher quality can prevent the copycat from successfully entering the market. Finally, we show that the entry of copycats does not always improve consumer surplus …
The Impact Of The Potential Entry Of Copycats: Entry Conditions, Consumer Welfare, And Social Welfare, Sarah Y. Gao, Wei Shi Lim, Christopher Tang
The Impact Of The Potential Entry Of Copycats: Entry Conditions, Consumer Welfare, And Social Welfare, Sarah Y. Gao, Wei Shi Lim, Christopher Tang
Research Collection Lee Kong Chian School Of Business
This article examines the implications of the potential entry of a copycat who produces and sells a copycat (i.e., imitation) product that competes with the incumbent product. By analyzing a two-period dynamic noncooperative game between these two firms, we identify conditions under which the copycat can gain successful market entry. More importantly, we find that the potential entry of a copycat creates (implicit) pressure for the incumbent to lower its selling price; hence, it improves consumer welfare. Finally, we identify conditions under which the potential entry of a copycat can increase social welfare (i.e., consumer welfare and the profit of …