Battling counterfeit masks during the COVID-19 outbreak: quality inspection vs. blockchain adoption

ABSTRACT

The coronavirus pandemic (COVID-19) threatens people's health. During the COVID-19 outbreak, people are encouraged to wear masks to reduce the spread of the virus. With the strong demand for masks, it has come a boom in counterfeit production. Combating counterfeit masks is vital and urgent to reduce the risks for public health. Motivated by the actual practices during the COVID-19, we examine how quality inspection and blockchain adoption help combat counterfeit masks. We find that quality inspection may not be always effective, as the government will tolerate the presence of counterfeit masks if the presence of the counterfeits is not significant. Comparing quality inspection with blockchain adoption, when the spread of COVID-19 is mild, authentic mask sellers may be encouraged to use the blockchain technology, which can increase their profits and reduce the social health risk. Furthermore, we extend our model to investigate the impacts of endogenous quality. Both quality inspection and blockchain adoption can induce low-quality mask sellers to enhance thequality level. When the number of counterfeit masks is increasing, encouraging the high-quality mask sellers to adopt the blockchain technology is effective to reduce social health risk when the spread of the coronavirus is rapid.