Question

What about the cost of counterfeit product and the loss of the legitimate owner?

Answer 1

The Organisation for Economic Cooperation and Development(OECD) placed the value of counterfeit goods at $1.7 trillion in 2015. The social cost of counterfeit products such as pharmaceuticals, food products, poor quality electronics that have high radiation, pesticides etc have increased the social costs for many producers and society at large. This is because producers lose business due to cheaper counterfeit products which capture the market illegaly and lead to loss of revenue for the firms. The social costs increase for the consumers as they face the harmful effects of usage of some of these products. Businesses in America lose almost close to $200 billion annualy. This has a damaging effect not only on the firms but also on the economy as a result of loss of employment, output and income. Ultimately, this affects the economic growth and development.