Impact of copycatting on the luxury manufacturer's distribution contracts in the e‐commerce era

Abstract

Although many luxury manufacturers have cooperated with e‐commerce platforms in reality, few studies have focused on the distribution contract options (retail or agency contracts) of luxury manufacturers in the presence of copycats. This paper demonstrates the effectiveness of different distribution contracts to prevent the entry of copycats and provides decision support for luxury manufacturers' anti‐copycat strategy. In particular, the e‐commerce platform can reduce the commission rate slightly to make the agency contract more effective in deterring copycats from entering the market. Finally, we find some results about consumer surplus and social welfare.