Equilibrium Parallel Import Policies and International Market Structure

46 Pages Posted: 20 Apr 2016

See all articles by Santanu Roy

Santanu Roy

Southern Methodist University (SMU) - Department of Economics

Kamal Saggi

Southern Methodist University (SMU) - Department of Economics

Date Written: September 1, 2011

Abstract

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.

Keywords: Markets and Market Access, Access to Markets, Economic Theory & Research, Microfinance, Emerging Markets

Suggested Citation

Roy, Santanu and Saggi, Kamal, Equilibrium Parallel Import Policies and International Market Structure (September 1, 2011). World Bank Policy Research Working Paper No. 5802, Available at SSRN: https://ssrn.com/abstract=1931366

Santanu Roy

Southern Methodist University (SMU) - Department of Economics ( email )

Dallas, TX 75275
United States

Kamal Saggi

Southern Methodist University (SMU) - Department of Economics ( email )

Dallas, TX 75275
United States
214-768-3274 (Phone)
214-768-1821 (Fax)

Do you have a job opening that you would like to promote on SSRN?

Paper statistics

Downloads
44
Abstract Views
472
PlumX Metrics