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the dismal science The Highest Form of Flattery Do knockoff Prada bags hurt Prada--or help the company sell more of the real thing? By Ray Fisman Posted Monday, May 30, 2011, at 8:04 AM ET If New York City councilwoman Margaret Chin has her way, it may soon be illegal to own a fake Prada handbag, or any of the other counterfeits openly sold in her Chinatown district, the "ground zero" for New York's knockoffs. Chin's proposed $1,000 fine for counterfeit buyers is merely the latest salvo in the war against designer rip-offs waged by the FBI, industry groups, and designers themselves. Yet a preliminary study focused on counterfeit sales in China--the source of all those fake handbags in Chinatown and just about everywhere else--suggests that in many cases the sale of fakes may not be so bad for legitimate brands. The study, by Northwestern economist Yi Qian, examined the counterfeit market in the wake of well-publicized cases of food poisoning and exploding gas tanks in China, when enforcement efforts were diverted from policing fashion copycats and toward monitoring drugs, food, and gas. Counterfeit factories flourished, but surprisingly, this led to an increase in sales for high-end products in the years that followed. To continue reading, click here. Ray Fisman is the Lambert Family professor of social enterprise and director of the Social Enterprise Program at the Columbia Business School. He is at work on a book about the economics of office life. Join the Fray: our reader discussion forum What did you think of this article? POST A MESSAGE | READ MESSAGES Also In Slate World Health Organization Raises Alarm About Cancer Risk From Cellphones Hitchens: Don't Forget for One Moment What a Monster Ratko Mladic Is The Sneaky, No-Good Tricks Colleges Use To Hide the Real Cost of Going to School	Advertisement
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