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The effects of parallel trade in two-sided markets

Author

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  • Kao, Kuo-Feng
  • Mukunoki, Hiroshi

Abstract

This study investigates the effects of parallel imports in two-sided markets, which may increase profits for manufacturers when products have a two-sided market nature. Additionally, parallel imports increase consumer surplus and social welfare in all countries if the network externalities from both sides are large enough. However, if one externality is small while the other is large, parallel imports can hurt consumers and welfare in all countries.

Suggested Citation

  • Kao, Kuo-Feng & Mukunoki, Hiroshi, 2021. "The effects of parallel trade in two-sided markets," Economics Letters, Elsevier, vol. 199(C).
    • Handle: RePEc:eee:ecolet:v:199:y:2021:i:c:s016517652030481x
    DOI: 10.1016/j.econlet.2020.109721
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    References listed on IDEAS

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    1. Malueg, David A. & Schwartz, Marius, 1994. "Parallel imports, demand dispersion, and international price discrimination," Journal of International Economics, Elsevier, vol. 37(3-4), pages 167-195, November.
    2. Keith E. Maskus & Yongmin Chen, 2004. "Vertical Price Control and Parallel Imports: Theory and Evidence," Review of International Economics, Wiley Blackwell, vol. 12(4), pages 551-570, September.
    3. Rasch, Alexander & Wenzel, Tobias, 2013. "Piracy in a two-sided software market," Journal of Economic Behavior & Organization, Elsevier, vol. 88(C), pages 78-89.
    4. Jota Ishikawa, 2004. "From Segmented Markets to Integrated Markets: an Analysis of Economic Integration and Antidumping Legislation," Review of International Economics, Wiley Blackwell, vol. 12(4), pages 706-722, September.
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    Citations

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    Cited by:

    1. KAO Kuo-Feng & MUKUNOKI Hiroshi, 2022. "Optimal Tariffs on a Monopoly Platform in Two-sided Markets," Discussion papers 22066, Research Institute of Economy, Trade and Industry (RIETI).
    2. OKOSHI Hirofumi & MUKUNOKI Hiroshi, 2024. "Keep Your Friends Close and Your Enemies Closer: Network externality and tax competition," Discussion papers 24024, Research Institute of Economy, Trade and Industry (RIETI).

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    More about this item

    Keywords

    Parallel trade; Two-sided market;

    JEL classification:

    • F12 - International Economics - - Trade - - - Models of Trade with Imperfect Competition and Scale Economies; Fragmentation
    • F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations
    • L14 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Transactional Relationships; Contracts and Reputation

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