The same goes with handbags, who would in their right mind, would want to buy a 2000 dollar bag just to brag about it among their friends. Even people rich enough to afford 10-15 thousand dollars bag would not want to show it off in this economy at least. But again these bags does not cost that much to start with. I believe that hardly these bags cost a couple of hundred bags if much less but due to the name of the label sell for thousands of dollars giving their owners or label holders hundreds if not thousand percent margin on each bag. Other thing is that would paying off taxes to the city make the bags or any other counterfeit product legitimate, I highly doubt it because no amount of money would make it a legitimate product.
In the name of exclusivity and uniqueness, the product deemed to be part of an exclusive club sells for thousands of dollars and with limited supply. This same exclusivity is sold for the same price or a little lesser price in developing countries where people demanding luxury at an affordable price gives an opportunity to criminals (or entrepreneurs) to manufacture those goods, put the luxury label on them and sell them at a price affordable to their fellow citizens. If the prices are reasonable to start with, then there would be no need to chase after counterfeit items and the amount of fighting counterfeit goods would be compensated by increased sales of legitimate goods only at a lower profit margin. Which makes me come to high margin for these luxury goods? If the profits could be reduced to the extent that people can be happy to pay that price, counterfeit goods and pirated software can be reduced if not eliminated which it can’t be in any way.