Trade Policy and Parallel Imports

Daniel Knox and Martin Richardson

Chapter 15 in Dimensions of Trade Policy, 2017, pp 301-325 from World Scientific Publishing Co. Pte. Ltd.

Abstract: We consider the simultaneous choice of parallel importing regime and tariff policy in a setting of international price discrimination by a monopolist. We show that an importer’s optimal tariff decreases when parallel imports (PIs) are permitted. This may lead to the monopolist benefiting from PIs. Allowing PIs is always attractive for a country whether or not it sets an optimal tariff. In a political economy modification, we show that the prohibition of PIs is more likely to emerge (where it would not otherwise) the more the government cares about lobby contributions and the greater are profits from price discrimination.

Keywords: Trade Policy; Preferential Trading Agreements; Content Protection; Parallel Imports (search for similar items in EconPapers)
JEL-codes: F13 (search for similar items in EconPapers)
Date: 2017
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Journal Article: Trade policy and parallel imports (2003)
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