Those weirdly persistent counterfeiting statistics

By Felix Salmon
December 6, 2009
Renee Richardson Gosline has done some research which, if it turns out to be true, could well show that the cost to established businesses of counterfeit luxury goods is actually negative:

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Renee Richardson Gosline has done some research which, if it turns out to be true, could well show that the cost to established businesses of counterfeit luxury goods is actually negative:

In a working paper she just finished this fall, “The Real Value of Fakes,” Gosline interviewed hundreds of consumers who knowingly bought fake luxury apparel, many at “purse parties” where such goods are sold. Gosline found that within two years, 46 percent of these buyers subsequently purchased the authentic version of the same product — even though other people could not necessarily tell the difference.

I haven’t been able to find a copy of the paper (put it up on SSRN, Renee!) but this is an astonishing finding. It seems that fake luxury goods are pretty much the best form of advertising out there: people who buy them and live with them have a very high probability of being converted to the brand and then going out and buying the real thing. What’s more, every time they go out with their fake item, they’re publicly displaying the desirability of the brand.

This explains why smart companies like Dolce & Gabbana refuse to get involved in prosecuting counterfeiters. The more information that emerges on the scale of counterfeiting, the more it seems as though it’s small and helpful, rather than large and extremely damaging. And yet Bloomberg’s Meg Tirrell, reporting on Gosline’s research, still feels compelled to include garbage pseudostatistics:

Counterfeiting costs U.S. businesses as much as $250 billion a year, according to the Washington-based International AntiCounterfeiting Coalition.

No, it doesn’t. Not even close. And given that Gosline’s own research shows that counterfeiting might help US businesses more than it hurts them, one might think that Tirrell would treat the baseless numbers from the IACC with a bit more skepticism. But unfortunately they’ve been repeated so many times at this point that they seem to be lodged in the collective journalistic consciousness. Maybe Gosline can try to help a couple of her interviewers to join the anti-anti-counterfeiting crusade.

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