Combating Online Counterfeits: A Game-Theoretic Analysis of Cyber Supply Chain Ecosystem

Abstract

Counterfeiting has been a pervasive threat to the security of supply chains. With the development of cyber technologies, traditional supply chains move their logistics to the cyberspace for better efficiency. However, counterfeiting threats still exist and may even cause worse consequences. It is imperative to find mitigating strategies to combat counterfeiting in the cyber supply chain. In this paper, we establish a games-in-games framework to capture the interactions of counterfeiting activities in the cyber supply chain. Specifically, the sellers in the cyber supply chain play a Stackelberg game with consumers, while sellers compete with each other by playing a Nash game. All sellers and consumers aim to maximize their utilities. We design algorithms to find the best response of all participants and analyze the equilibrium of the supply chain system. Finally, we use case studies to demonstrate the equilibrium behavior and propose effective anti-counterfeit strategies.