Do Consumers Discount Parallel Imports?

Asai-Pacific Journal of Accounting and Economics, 2013

Posted: 22 Jun 2016

See all articles by Kong-Pin Chen

Kong-Pin Chen

Academia Sinica - Research Center for Humanities and Social Sciences; National Taiwan University - Department of Economics

Hung-pin Lai

National Chung Cheng University - Department of Economics

Ya-Ting Yu

Graduate Institute of Industrial Economics

Date Written: June 22, 2013

Abstract

Using data from Taiwan's Yahoo! auctions of Nikon cameras, this paper investigates whether there exists any difference in transaction results between commodities which are sold by authorized sellers and those which are parallel imports. We find that the parallel imports and the authorized products differ not only in the warranty duration offered by the sellers, but also in the formats in which they are listed, both of which substantially affect trade probability and transaction price. We first use the sellers' inventory and experience as instrumental variables to endogeneize their choice of the fixed-price listing and BIN auction, respectively. We show that, after taking into account the endogenous choice of listing formats and the characteristics of the sellers and the items, an authorized product has a 7 percent higher trade probability than that of a parallel import and, if there is a sale, the transaction price as a ratio of the manufacturer's suggested retail price is 0.093 higher. A small number of less experienced parallel import sellers, in an attempt to maintain a price comparable to the authorized product, list their items in pure auction with unusually high starting bids. This accounts for the overall lower trade probability for the parallel imports.

If we disregard these sellers who adopt pure auction, the authorized product has higher transaction price than, but about the same trade probability as the parallel import.

Keywords: Yahoo!, online auctions, parallel imports, warranty, sale rate, transaction price, sellre reputation, seller experience

JEL Classification: D44, L81,M31, F1

Suggested Citation

Chen, Kong-Pin and Lai, Hung-pin and Yu, Ya-Ting, Do Consumers Discount Parallel Imports? (June 22, 2013). Asai-Pacific Journal of Accounting and Economics, 2013. Available at SSRN: https://ssrn.com/abstract=2799171

Kong-Pin Chen (Contact Author)

Academia Sinica - Research Center for Humanities and Social Sciences ( email )

RCHSS
Academia Sinica
Nankang, Taipei, 11529
Taiwan
886 2 2789 8160 (Phone)
886 2 2785 4160 (Fax)

HOME PAGE: http://idv.sinica.edu.tw/kongpin/

National Taiwan University - Department of Economics

21 Hsiu Chow Rd
Taipei, 10020
Taiwan

Hung-pin Lai

National Chung Cheng University - Department of Economics ( email )

Ming-Hsiung, Chia-Yi, 621
Taiwan
886-5-2720411 ext 34110 (Phone)
886-5-2720816 (Fax)

HOME PAGE: http://bach.ccu.edu.tw/Site/ecdhpl-ccu_edu_tw_xoxpmq/Intro/

Ya-Ting Yu

Graduate Institute of Industrial Economics ( email )

No. 300, Zhongda Road
Chung-Li Taiwan, 32054
Taiwan

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