Shopping for Gucci on Canal Street: Reflections on Status Consumption, Intellectual Property and the Incentive Thesis

The standard incentive rationale for intellectual property rights assumes (among other things) that unauthorized imitation necessarily reduces innovation incentives by depriving the innovator of sales it would otherwise enjoy in the absence of such imitation. This thesis falsely predicts that the fashion industry, which has few meaningful forms of legal protection and is consequently exposed to widespread counterfeiting, would suffer from low investment in the development and production of new items.

This Essay accounts for this anomalous result by proposing a mechanism whereby counterfeiting is likely to increase innovators’ expected profits in markets where (among other things) demand is driven in substantial part by the status benefits that accrue to visible consumers of the relevant item. This claim relies on a rational-choice approach to intellectual property rights that unusually takes into account the cyclical and interdependent consumption patterns peculiar to fashion or status goods markets. Building on the existing economic literature on fashion goods markets, the Essay proposes that counterfeiting (provided it is visibly imperfect, which is typically the case) may increase the expected profits of legitimate producers, by inflating the premium that “trend-setting” consumers are willing to pay in order to acquire what is now labeled as the “original” good, and by advertising and even exaggerating the popularity of the original good (in addition to its imitations) among “trend-following” consumers.

Given these benefits, counterfeiting should not always be expected to depress innovation incentives, which successfully accounts for the apparently anomalous state of affairs in the fashion industry, where high levels of legitimate production coexist with high levels of unauthorized imitation. As a normative matter, while this result apparently counsels against allocating significant social resources to enforcement of anti-counterfeiting statutes, it nonetheless remains undetermined whether tolerating positive levels of imperfect counterfeiting is the preferred policy option, given the fact that fashion goods purchases are at least partially motivated by a mutually defeating (and, therefore, socially wasteful) race among consumers to acquire or defend positions on the social ladder. Even if the standard incentive thesis cannot justify a significant investment by the state in detecting and prosecuting imperfect counterfeiters, such investment may be socially beneficial to the extent that it increases the cost of acquiring counterfeit fashion goods and therefore limits socially wasteful expenditures on such goods.

Justifying Self-Defense: A Theory of Forced Consequences

Why do we have a right to self-defense? Over the years, this seemingly simple question has proved difficult to answer. The right to self-defense arises in situations that involve culpable, non-culpable or non-agent aggressors. The difficulty is to find an explanation that justifies self-preference in each of these instances and maintains the moral distinction between the permitted killing of aggressors and the prohibited killing of innocent bystanders.

This Essay examines three lines of justifications that have been developed over the past three decades: lesser harmful results, forced choice and the rights theory. The “lesser harmful result” argument maintains that the killing of the aggressor is a lesser harm than the death of the defender. The “forced choice” argument says that self-defense is either justified because the defender is uniquely forced to choose between his life and the life of the aggressor, or excused because the he lacks real choice. Finally, the “rights theory” justifies self-defense by the prevailing right of the defender not to be killed over that of the aggressor.

This Essay argues that all three explanations fall short of the comprehensive justification needed to answer this question. It develops a new justification based on a theory of forced consequences. This justification combines two principles: the commonly recognized civil-law principle of fault-based selection and the principle according to which—in situations where either A or B must pay the costs for A’s “bad luck”—A must be the one to pay these costs and may not transfer the burden onto B.