Close But Not Too Close? Optimal Copycat Strategies in the Light of Negative Publicity by the Original Product

Abstract: This paper contributes to the understanding of how brand scandals related to a brand leader’s product affect the follower firm’s choice between copycatting and independent product development. In a model of vertical product differentiation, we show that it is optimal for the copycatter to follow a ‘safe distance’ strategy which guarantees a certain degree of protection against the negative spillovers associated with a brand scandal to the leader. Nevertheless, when the follower firm can choose between copycatting and decoupling, it chooses a higher quality for its copycat product because of the lower development costs. The decision for or against copycatting thus depends on a trade-off between development costs and the possibility of negative spillovers. Finally, we show that the threat of a scandal can lead to an additional indirect welfare cost because it diverts the follower’s choice away from a welfare-maximizing copycat strategy.

Object Details

• Location: Deutsche Nationalbibliothek Frankfurt am Main
• Extent: Online-Ressource
• Language: Englisch

References and Relationships

• Bibliographic citation: Close But Not Too Close? Optimal Copycat Strategies in the Light of Negative Publicity by the Original Product ; volume:24 ; number:2 ; year:2024 ; pages:649-658 ; extent:10 ; The B.E. journal of economic analysis & policy ; 24, Heft 2 (2024), 649-658 (gesamt 10)

Contributors, Places and Time

• Creator: Grosser, Joachim ; Sonnabend, Hendrik ; Westbrock, Bastian

Further information

• DOI: 10.1515/bejeap-2022-0456
• URN: urn:nbn:de:101:1-2024041317293744600234
• Rights: Open Access; Der Zugriff auf das Objekt ist unbeschränkt möglich.
• Last update: 14.08.2025, 10:44 AM CEST