Genuine manufacturers provide product quality and other secondary levels, which is the decision variables of genuine manufacturers

p i

i = 1 , 2 , Genuine (pirated) product price, that is, genuine (pirated) vendor decision variables;

d i

i = 1 , 2 , Genuine (pirated) vendor demand, and assumed market capacity is 1


Consumers’ valuation of the quality of genuine products


The consumer’s preference for product network externality, the increase of unit demand to consumer utility


The discount rate, that is, the consumer’s evaluation of pirated products is a discount on the value evaluation of genuine products, 0 < α < 1