Markets of Quasi-Credence and Similar Foods

Abstract

This chapter considers quasi-credence and similar foods in Southeast Asian countries. In a market of foreign foods (quasi-credence foods) where domestic consumers cannot distinguish counterfeits from originals even after eating them, domestic authorities do not have an incentive for enforcement if originals are not produced in the country, that is, if profits of an original producer do not contribute to domestic social welfare. An incentive for strict enforcement exists only if originals are produced in the country. I also consider a market of similar processed foods, where judgement about design right infringement is vague. Some companies sue, and others do not respond to the infringement. I consider this phenomenon by using a model of monopolistic competition and prove that the similarity can create positive mutual externalities and benefit all producers. This outcome parallels a form of biological mimicry (Mullerian mimicry).