Katherine Sauer () (University of Southern Indiana)
Abstract
A model is developed to explore the behavior of an original manufacturer with a patent in response to a policy that permits parallel import competition from a country with price controls on the patented good. The model suggests that a manufacturer will limit its supply to the PI-exporting market. The home price is lower only under certain conditions. The relative size of the home market to the potential volume of PIs is a key determinant of the manufacturer’s decision to accommodate competition or deter it. Whether the firm accommodates or deters competition, profits fall.
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Publisher Info
Article provided by Economics Bulletin in its journal Economics Bulletin.
Find related papers by JEL classification: F1 - International Economics - - Trade I1 - Health, Education, and Welfare - - Health
References listed on IDEAS Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
Keith E. Maskus, 2000.
"Parallel Imports,"
The World Economy,
Blackwell Publishing, vol. 23(9), pages 1269-1284, 09.
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