Damage caused to firms

For firms, counterfeiting causes:

• financial damage, in terms of reduction of revenues and an increase in legal costs, to the detriment of investments and production.

• damage to image, since circulation of counterfeit products, often of much poorer quality than the original products, leads unknowing consumers to confuse the poor quality of the counterfeit product with the excellent quality of the original.

• competitive damage, since counterfeiting discourages designers and inventors, when they are unduly deprived of the results of their inventive and creative activity. This suffocates firms' incentive to innovate and they are forced to improve and renew their products and processes constantly if they wish to maintain or increase their market shares. Innovation is, in fact, one of the driving forces of growth for firms and the economic prosperity of society as a whole

 competitive damage also means that both exploitation of the weak (workers without contracts, mainly non-EU citizens paid cash in hand and with no insurance coverage) and evasion of VAT and other taxes (direct and indirect) increase unfair competition, based on the lower production costs which alter market equilibrium.




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