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Tariff policy and exhaustion of intellectual property rights in the presence of parallel imports

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  • Jung Hur
  • Yohanes E. Riyanto

Abstract

This paper examines an interplay between tariff policy and parallel-import policy. From a welfare point of view, a host government would prefer allowing parallel imports to prohibiting them. However, if a tariff is not at the government's disposal, there will be no parallel imports in equilibrium because a foreign manufacturer would prefer adopting a uniform pricing policy to a discriminatory pricing policy, which will prevent parallel imports from occurring. If a tariff is at the government's disposal, it can be set optimally to induce the foreign manufacturer to impose a price discrimination policy. Such a policy will facilitate entry by a parallel importer provided that parallel imports are feasible. Copyright 2006, Oxford University Press.

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Bibliographic Info

Article provided by Oxford University Press in its journal Oxford Economic Papers.

Volume (Year): 58 (2006)
Issue (Month): 3 (July)
Pages: 549-568

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Handle: RePEc:oup:oxecpp:v:58:y:2006:i:3:p:549-568

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Cited by:
  1. Andrea Mantovani & Alireza Naghavi, 2010. "Parallel Imports and Innovation in an Emerging Economy," Center for Economic Research (RECent), University of Modena and Reggio E., Dept. of Economics 038, University of Modena and Reggio E., Dept. of Economics.
  2. Arijit Mukherjee & Laixun Zhao, 2012. "Profitable parallel trade in unionized markets," Journal of Economics, Springer, Springer, vol. 107(3), pages 267-276, November.
  3. Rajat Acharyya & Maria D.C. Garcia-Alonso, 2010. "Income Based Price Subsidies and Parallel Imports," Studies in Economics, Department of Economics, University of Kent 1008, Department of Economics, University of Kent.

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