Equilibrium Parallel Import Policies and International Market Structure

Kamal Saggi () and Santanu Roy

No 1113, Vanderbilt University Department of Economics Working Papers from Vanderbilt University Department of Economics

Abstract: In a North-South vertically differentiated duopoly, we derive equilibrium government policies towards parallel imports (PIs). By incorporating strategic interaction at the policy-setting stage and the product market, the model sheds new light on (i) the effects of PI policies on pricing behavior of firms and (ii) the interdependence of national PI policies. If demand asymmetry across countries is sufficiently large, the North forbids PIs to ensure its firm sells in the South thereby generating international price discrimination -- the South's most preferred market outcome -- as the equilibrium. When demand structures are relatively similar across countries, the North permits PIs and uniform pricing -- its most preferred market outcome -- obtains.

Keywords: Parallel Imports; Oligopoly; Quality; Product Differentiation; Market Structure; Welfare; Trade Policy (search for similar items in EconPapers)
JEL-codes: F10 F13 F15 (search for similar items in EconPapers)
Date: 2011-09
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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http://www.accessecon.com/pubs/VUECON/vu11-w13.pdf First version, September 2011 (application/pdf)

Related works:
Chapter: Equilibrium parallel import policies and international market structure (2023)
Journal Article: Equilibrium parallel import policies and international market structure (2012)
Working Paper: Equilibrium parallel import policies and international market structure (2011)
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Persistent link: https://EconPapers.repec.org/RePEc:van:wpaper:1113

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