A New York City councilwoman is trying to make it illegal to own a knock-off designer bag in her district of Chinatown, on the grounds that it hurts business for the real designer. Not so fast, writes Ray Fisman at Slate. Counterfeits may actually help those businesses by essentially acting as free advertising. He cites one study showing that when more knock-offs made it into the marketplace, sales actually improved in subsequent years for companies selling the real thing.
Another study may explain why: "Subjects formed attachments to their phony Vuittons and came to crave the real thing when, inevitably, they found the stitches falling apart on their cheap knockoffs," writes Fisman. "Within a couple of years, more than half of the women—many of whom had never fancied themselves consumers of $1,300 purses—abandoned their counterfeits for authentic items." Designers should not stop going after counterfeiters, he writes, but it might pay for them to make the real items even better and pricier.