Substantive VS Symbolic: E-commerce platform’s anti‐counterfeiting strategy with brand’s exit threat

In practice, e‐commerce platforms often struggle with counterfeit products that possess nearly identical ”consumption quality” to genuine products. Platforms may lack sufficient incentives to enforce substantive anti‐counterfeiting measures, leading many brands to adopt a ”exit and direct-selling” strategy to protect their brand image. We investigate the brand’s channel choice by examining the trade-offs among three factors: the brand’s direct‐channel operating cost, the consumption quality of counterfeit products, and the platform’s commission rate. The platform, in turn, decides whether to undertake substantive anti‐counterfeiting governance or merely symbolic commitment, anticipating the brand’s exit threat. Our findings indicate that when the brand’s direct‐channel operating cost and the consumption quality of both products (counterfeit products vs. genuine products) are extremely low, the platform chooses symbolic anti‐counterfeiting commitment and the brand exits. Under low platform commission, substantive enforcement with brand retention occurs only when anti‐counterfeiting enforcement is cheap and effective. High commission always triggers symbolic commitment and brand exit. Interestingly, a counter‐intuitive result emerges under a moderate commission rate and high consumption quality: the platform adopts substantive enforcement, yet the brand exits. This paradox arises only when enforcement is cheap but ineffective (low success rate). Thus, substantive anti‐counterfeiting can sometimes drive brands away which is a critical insight for platform governance.