E-commerce: a brand name's curse

The reach of the Internet and the low cost of selling products online have made it possible for anybody to participate in the online market. In this paper, we argue that e-commerce can be a brand name's curse due to information asymmetries and the existence of indifferent consumers, which perpetuate counterfeiting of branded products and the infringement of brand names in e-markets. Counterfeiting and infringement devalue the information capital embodied in a brand name, and ultimately reduce sales and profits of the brand name holders. While legal measures have been enacted to deal with intellectual property problems, we argue that market mechanisms are more efficient and more effective in dealing with brand name problems in e-markets. This is because rules in themselves often provide neither the slightest hint of where to look for violations, nor the incentive to convict violators. Market mechanisms such as information syndication, pricing of e-markets services, and vendor malpractice could be effective in deterring counterfeiting and brand name infringement. We hope our positional contribution will stir interest to look into this serious problem and extend our suggestions by developing concrete innovative mechanisms to safeguard online transactions.