Luxury Resale Market Threatened by Flood of 'Superfake' Bags
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The market for buying and selling luxury bags has boomed, growing over 300% in the last decade to be worth around $200 billion annually.
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Technological improvements have enabled a flood of high-quality counterfeits, called "superfakes", that cost 10x less and are hard to distinguish from the real thing.
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This has led to information asymmetries in the market where sellers know if a bag is real but buyers cannot tell, similar to the "lemon" problem with used cars.
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Reselling platforms meant to authenticate luxury goods have struggled to distinguish fakes, as evidenced by Chanel's recent lawsuit against What Goes Around Comes Around.
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The inability to reliably authenticate goods could lead the resale market to collapse entirely as in Akerlof's model, hurting resellers, brands, and consumers.