International effects of national regulations: external reference pricing and price controls

Difei Geng and Kamal Saggi ()

No 17-00010, Vanderbilt University Department of Economics Working Papers from Vanderbilt University Department of Economics

Abstract: Under external reference pricing (ERP) the price that a government permits a firm to charge in its market depends upon the firm's prices in other countries. In a two-country (home and foreign) model where demand is asymmetric across countries, we show that home's unilaterally optimal ERP policy permits the home firm to engage in a threshold level of international price discrimination above which it is (just) willing to export. If the firm faces a price control abroad or bargains over price with the foreign government, an ERP policy can even yield higher home welfare than a direct price control.

Keywords: External reference pricing policies; price controls; patented products; welfare. (search for similar items in EconPapers)
JEL-codes: D4 F1 (search for similar items in EconPapers)
Date: 2017-08-16
New Economics Papers: this item is included in nep-int
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (4)

Downloads: (external link)
http://www.accessecon.com/pubs/VUECON/VUECON-17-00010.pdf (application/pdf)

Related works:
Journal Article: International effects of national regulations: External reference pricing and price controls (2017)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:van:wpaper:vuecon-sub-17-00010

Access Statistics for this paper

More papers in Vanderbilt University Department of Economics Working Papers from Vanderbilt University Department of Economics Contact information at EDIRC.
Bibliographic data for series maintained by John P. Conley ().