Wholesale Price Discrimination and Parallel Imports

Ganslandt, Mattias; Maskus, Keith E.

doi:10.2139/ssrn.968697

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Wholesale Price Discrimination and Parallel Imports

37 Pages Posted: 9 Mar 2007

See all articles by Mattias Ganslandt

Mattias Ganslandt

Centre for European Law and Economics; Research Institute of Industrial Economics; University of Colorado at Boulder - Department of Economics

Keith E. Maskus

University of Colorado at Boulder - Department of Economics; CESifo (Center for Economic Studies and Ifo Institute)

There are 2 versions of this paper

Date Written: March 5, 2007

Abstract

We develop a model of vertical pricing in which an original manufacturer sets wholesale prices in two markets integrated at the distributor level by parallel imports (PI). In this context we show that if competition policy requires uniform wholesale prices across locations it would push retail prices toward convergence as transportation costs fall. However, these retail prices could be higher than those induced without restrictions on prices charged to distributors. Thus, the competition policy may not be optimal for consumer welfare.

Keywords: Vertical Restraints, Parallel Imports, Market Integration, Price Discrimination, Competition Policy

JEL Classification: F15, L14, K21

Suggested Citation: Suggested Citation

Ganslandt, Mattias and Maskus, Keith E., Wholesale Price Discrimination and Parallel Imports (March 5, 2007). Available at SSRN: https://ssrn.com/abstract=968697 or http://dx.doi.org/10.2139/ssrn.968697