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Incenses are held items introduced in Generation III. If held by a specific Pokémon and bred with a compatible Pokémon, the Pokémon will produce an egg, holding a baby Pokémon introduced within Generation III or so. In addition, Pokémon will also receive an extra effect during a battle.
The Luck Incense will double the prize money when the holder joins in a trainer battle. When held by Chansey or Blissey and bred with a compatible parent, they will produce the Normal-type Pokémon Happiny.
The Pure Incense repels any Pokémon of a lower level than the holder if the holder is the first one in the party. If held by Chimecho and bred with a compatible parent, they will produce the Psychic-type Pokémon Chingling.