【Topic】
Application of blockchain in the secondary market with counterfeiting
【Host】
Prof. Chen Jiguang, associate professor of management science department, school of management, Xiamen University
【Abstract】
It is not uncommon for customers who intend to buy a used product in the secondary market to end up with a counterfeit because they have imperfect information about product authenticity. Blockchain is being piloted as a cutting-edge solution to this challenge. We use a two-period game to study the impact of utilizing blockchain to combat counterfeits in the secondary market. We show that, even when the cost of implementing blockchain is negligible, the manufacturer can be better off incurring reputation damage rather than adopting blockchain. Further, the used goods reseller can be worse off from blockchain, even though it is not responsible for the implementation cost and benefits from blockchain’s signaling capability. We also demonstrate that the counterfeiter can benefit as a result of blockchain. When the quality of a fake product is sufficiently low, blockchain lowers consumer surplus. The winning situation of blockchain between the manufacturer, reseller and customers is achieved only when the fake product has intermediate quality. For those used products that has a low perceived quality, blockchain can be powerful in those cases; otherwise, blockchain may not be ideal.
【Speaker】
Hubert Pun
Dr. Hubert Pun is the J. Allyn Taylor/Arthur H. Mingay Chair and the PhD Program Director at the Ivey Business School. Hubert grew up in Hong Kong. He earned his undergraduate and Master’s degrees in engineering in Vancouver. He became part of an expansion team at a Venezuelan start-up company which grew into Central/North America (e.g., Colombia, Mexico, Panama, and USA) during 2002-2005. Hubert completed his PhD at Indiana University in 2010. He joined the Ivey Business School in 2010. He was awarded with Ivey Dean’s Teaching Commendation Letters (top 10% Ivey faculty) in 2016 and 2017. He won the Research Merit Award (top 10% Ivey faculty) in 2019, 2020, 2021, 2022 and 2023. He also received the Western Faculty Scholar Award for his research contribution to blockchain business application. His case, "General Motors: Supplier Selection for Innovation" is the runner-up top seller of the year (2022-2023) at Ivey Publishing.
