Equilibrium Parallel Import Policies and International Market Structure
In a North-South vertically differentiated duopoly, the analysis in this paper derives equilibrium government policies towards parallel imports. By incorporating strategic interaction at the policy-setting stage and the product market, the model sh...
| Main Authors: | , |
|---|---|
| Format: | Policy Research Working Paper |
| Language: | English |
| Published: |
2012
|
| Subjects: | |
| Online Access: | http://www-wds.worldbank.org/external/default/main?menuPK=64187510&pagePK=64193027&piPK=64187937&theSitePK=523679&menuPK=64187510&searchMenuPK=64187283&siteName=WDS&entityID=000158349_20110920162458 http://hdl.handle.net/10986/3566 |
| Summary: | In a North-South vertically
differentiated duopoly, the analysis in this paper derives
equilibrium government policies towards parallel imports. By
incorporating strategic interaction at the policy-setting
stage and the product market, the model sheds new light on
(i) the effects of parallel import policies on pricing
behavior of firms and (ii) the interdependence of national
parallel import policies. If demand asymmetry across
countries is sufficiently large, the North forbids parallel
imports 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 parallel imports and
uniform pricing -- its most preferred market outcome -- obtains. |
|---|