Counterfeiting in digital technologies: An empirical analysis of the economic performance and innovative activities of affected companies

This study analyses empirically the effects of counterfeiting on the economic and innovation performance of firms, exploiting a novel and unique dataset that integrates information on custom seizures worldwide during years 2011-2013 with financial accounting data, patent and trademark data for a sample of digital technology companies. We apply diff-in-diff models using a large control sample of non-affected firms. Results provide robust evidence that counterfeiting is associated to a negative impact on operative margins of affected companies, relative to the control sample. The analysis does not find conclusive evidence on the effects of counterfeiting on the innovation activities of affected companies. We find no evidence in support of the hypothesis that counterfeiting could also exert an indirect positive effect on the sales of genuine goods.