Product Introduction with Parallel Importation

Fengmei Xu, Feng Yang (), Feifei Shan and Ting Chen ()
Additional contact information
Fengmei Xu: School of Economics and Management, Anhui Polytechnic University, Beijing Middle Road, Wuhu, Anhui, P. R. China2School of Management, University of Science and Technology of China, 96 Jinzhai Road, Hefei, P. R. China
Feng Yang: School of Management, University of Science and Technology of China, 96 Jinzhai Road, Hefei, P. R. China
Feifei Shan: School of Management, University of Science and Technology of China, 96 Jinzhai Road, Hefei, P. R. China
Ting Chen: School of Foreign Language, Hefei Normal University, 1688 Lianhua Road, Hefei, P. R. China

Asia-Pacific Journal of Operational Research (APJOR), 2025, vol. 42, issue 02, 1-31

Abstract: The aim of this paper is to investigate the manufacturer’s product introduction decision when entering a foreign market by considering parallel importation. This paper considers a situation where a manufacturer already sells an original product directly in the domestic market and decides to introduce an original product, a new product, or both through a retailer in a foreign market, and a parallel importer may divert the original product across markets due to price gap (we call it parallel importation). This paper shows that when consumers perceive gray products as perfect substitutes for authorized products, the manufacturer switches from introducing two products to introducing a new product and still maintains the quality of the new product in the presence of parallel importation. Furthermore, in response to parallel importation, the manufacturer not only narrows the price gap for original products between two markets but also reduces the wholesale price of new products in the foreign market. In addition, parallel importation always hurts the retailer but may benefit the manufacturer. Counterintuitively, parallel importation always improves social welfare in the domestic market but may damage social welfare in the foreign market.

Keywords: Product introduction; parallel importation; gray market; market entry; game theory (search for similar items in EconPapers)
Date: 2025
References: Add references at CitEc
Citations:

Downloads: (external link)
http://www.worldscientific.com/doi/abs/10.1142/S0217595924500131
Access to full text is restricted to subscribers

Related works:
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:wsi:apjorx:v:42:y:2025:i:02:n:s0217595924500131

Ordering information: This journal article can be ordered from

DOI: 10.1142/S0217595924500131

Access Statistics for this article

Asia-Pacific Journal of Operational Research (APJOR) is currently edited by Gongyun Zhao

More articles in Asia-Pacific Journal of Operational Research (APJOR) from World Scientific Publishing Co. Pte. Ltd.
Bibliographic data for series maintained by Tai Tone Lim ().