Abstract

The aim of the paper is to analyze the market of fakes in the design-based industry and the effectiveness of the legal regulation of this market. In the first part of the paper we discuss the probability of copying a product characterized by a high degree of intellectual propriety. Moreover are examinated the forms that producers can use in protecting their products from unfair competition and illegal copy. Then the economic behavior of individual agents (consumers) is discussed with reference to the cost and benefits of buying a fake. The second part of the paper is related to policy issues. We discuss the effects of the law enforcement over three segments of the market: the legal, the illegal and the criminal market. Our conclusions suggest that an economic dilemma exists; fighting against the illegal firms can give room the expansions of the criminal organizations.