Counterfeiting has always been a problem. Counterfeiting is a term used to describe a range of illicit activities linked with trademark infringement. The paper we present focuses on victims to counterfeiting – owners of registered trademarks. The paradox is that they partly contribute to the market expansion of counterfeited goods. This happens because the modern production is subject to sign-consumption. In the Russian economy owners of registered trademarks are said not to be very active in combating with counterfeiting. All companies we interviewed may be divided into four groups: aggressive fighters, lazy fighters, and selfish-non-fighters and discouraged non-fighters. The key feature of all companies’ behavior is that they make great efforts to hide the information about fakes from all external observers. They are too scared of any negative information that can harm their brands and break the market status quo.
This is the first paper on consumer search where the cost of going back to stores already searched is explicitly taken into account. We show that the optimal sequential search rule under costly second visits is very different from the traditional reservation price rule in that it is nonstationary and not independent of previously sampled prices. We explore the implications of costly second visits on market equilibrium in two celebrated search models. In the Wolinsky model some consumers search beyond the first firm and in this class of models costly second visits do make a substantive difference: equilibrium prices under costly second visits can both be higher and lower than their perfect recall analogues. In the oligopoly search model of Stahl where consumers do not search beyond the first firm, there remains a unique symmetric equilibrium that has firms use pricing strategies that are identical to the perfect recall case.