Research on Automotive Part Production Strategy Concerning Piracy Rate

A two-stage game between genuine part maker and counterfeiter in automotive part market is analyzed based on manufacturing cost and part quality. At the first stage, the genuine manufacturer determine the total demand in the market by choosing the supply quantity of whole automobiles; At the second stage, genuine part maker and counterfeiter choose their respective optimum prices given a known total market demand. Research shows that: because of a correlation between manufacturing quality, cost and quantity, genuine and fake manufacturers will yield different product prices and market shares in different total market demands. Only when the total market demand beyond a certain threshold, can counterfeit products emerge. Furthermore, there exists an optimum market demand at which the genuine manufacturers can achieve maximum profits. The total market demand is controllable by the supply quantity of whole automobiles for genuine manufactures, thus properly controlling automobiles´ supply quantity is effective to protect genuine manufacturers´ profits.