Should brand-owners adopt blockchain to combat deceptive counterfeits when competing with copycats? Impact of consumers' anticipated regret

Abstract

Original products (sold by a brand-owner) are exposed to the dual challenge of imitation products (sold by a copycat) and deceptive counterfeit products (provided by a counterfeiter). In such cases, consumers face higher shopping risks and are more likely to experience post-purchase regret. Blockchain can prevent the infiltration of deceptive counterfeits and the occurrence of regret, but its adoption can also raise consumer privacy concern. Hence, considering the above factors, we focus on the brand-owner's blockchain adoption strategy. First, we define two types of regret: counterfeit-purchasing regret (CPR) and low-cost-effective regret (LCR). Second, we consider three scenarios: scenario NR: without blockchain and considering only CPR, scenario NT: without blockchain and considering only LCR, and Scenario B: with blockchain. Finally, we compare the equilibrium results under scenarios NR and NT with those under scenario B, respectively. We interestingly find that blockchain adoption benefits the brand-owner when (1) privacy concern is low or (2) privacy concern is moderate and the sensitivity factor of CPR is large or the sensitivity factor of LCR is small. Therefore, we advise brand-owners to intervene in consumers' sensitivity to regret in order to make blockchain adoption work in their favor.