Will the presence of 'fashion knockoffs' benefit the original-designer-label product supply chain?*

Fashion knockoffs, which refer to the copycat behaviours of some brands in fashion apparel, are widely seen. It is commonly believed that the presence of fashion knockoffs harms the original-designer-label (ODL) product seller. Motivated by the industrial interviews and real-world observations, we build game-theoretical models to examine the impacts of fashion knockoffs on the ODL product supply chain and its agents with the consideration of risk attitudes. Explicitly, in the basic model, we consider a common manufacturer producing for both a knockoff product seller and a risk sensitive ODL product seller. The ODL product seller and the knockoff product seller make pricing decisions to optimise their own profits. We interestingly find that the presence of fashion knockoffs benefits the ODL product supply chain and its agents when (i) the ODL product seller is risk averse and the ratio of demand uncertainty is relatively small or (ii) the ODL product seller is risk seeking and the ratio of demand uncertainty is sufficiently large. The findings indicate that a risk averse (seeking) ODL product seller is more prone to benefit from the presence of fashion knockoffs when selling fashionable (classic) products.

Automated summary

Fashion knockoffs, although harmful in general, can actually benefit the original-designer-label supply chain and its agents under certain conditions, as shown by our game-theoretical models considering risk attitudes.