Fight Against Counterfeits: Traditional Anticounterfeiting Versus Blockchain Adoption

Counterfeits have spread across nearly every product category, posing significant f inancial and reputational threats to brand companies. In response, companies are adopting various strategies to address this issue, including blockchain adoption and traditional anti-counterfeiting. Specifically, anti-counterfeiting aims to reduce or elim inate counterfeits from the market, increasing the likelihood that consumers will pur chase the authentic product. In contrast, blockchain adoption allows consumers who engage with it to fully recognize the authentic product. In this paper, we build analyt ical models to explore a brand company's optimal strategies by considering a market where consumers are categorized into two groups based on their awareness of counter feits: informed consumers and uninformed consumers. Our findings suggest that the brand company should implement anti-counterfeiting when there are more uninformed consumers and the initial proportion of the authentic product is high. Otherwise, blockchain adoption is the better strategy. Furthermore, while both strategies effec tively combat counterfeits, they should not be viewed solely as substitutes. When the initial proportion of the authentic product is low and the reputation loss is not significant, the company tends to earn more from anti-counterfeiting when adopting blockchain compared to when blockchain is not used. In other words, the two strategies are complementary.