Product Innovation and Parallel Trade

Posted: 27 Jan 2010

See all articles by Jack Robles

Jack Robles

Victoria University of Wellington - Te Herenga Waka - School of Economics & Finance

Date Written: 2003

Abstract

We study the dependence of incentives for product innovation on the presence, or absence, of parallel trade. The common assertion is that the presence of parallel trade lowers the incentive for product innovation. Our results support this assertion for some parameter values. However, there are cases in which the presence of parallel trade increases research intensity. For this to occur the innovating firm must already produce and export another good. Further, the new good and the old must be close substitutes and have different transportation costs.

Keywords: Innovation, Trade, incentives, Parallel trade, Transportation costs, Substitutes

JEL Classification: F12, L10, K11

Suggested Citation

Robles, Jack, Product Innovation and Parallel Trade (2003). Available at SSRN: https://ssrn.com/abstract=1542943

Jack Robles (Contact Author)

Victoria University of Wellington - Te Herenga Waka - School of Economics & Finance ( email )

P.O. Box 600
Wellington 6001
New Zealand

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