Parallel trade, product quality, and welfare
AbstractWe study the welfare effects of parallel trade (PT) considering investment in quality. We thus revisit the case for allowing PT in research-intensive industries. We find that quality may be higher with than without PT, depending on how consumersÕ preferences for quality differ across countries. Conditional on quality, consumer surplus may rise in the source country, or fall in the destination country of PT. We find that PT reduces ex post welfare, and improving quality is a necessary (and sometimes sufficient) condition for PT to increase welfare ex ante.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoPaper provided by Department of Computer, Control and Management Engineering, Universita' degli Studi di Roma "La Sapienza" in its series DIAG Technical Reports with number 2013-14.
Length: 13 pages
Date of creation: 2013
Date of revision:
Parallel trade; Price discrimination; R&D investment; Intellectual property rights;
This paper has been announced in the following NEP Reports:
- NEP-ALL-2013-11-22 (All new papers)
- NEP-COM-2013-11-22 (Industrial Competition)
- NEP-GTH-2013-11-22 (Game Theory)
- NEP-IND-2013-11-22 (Industrial Organization)
- NEP-INO-2013-11-22 (Innovation)
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.:
- Li, Changying & Maskus, Keith E., 2006. "The impact of parallel imports on investments in cost-reducing research and development," Journal of International Economics, Elsevier, vol. 68(2), pages 443-455, March.
- Gene M. Grossman & Edwin C.-L. Lai, 2006.
"Parallel Imports and Price Controls,"
NBER Working Papers
12423, National Bureau of Economic Research, Inc.
- Malueg, D.A. & Schwartz, M., 1993.
"Parallel Imports, Demand Dispersion and International Price Discrimination,"
93-6, U.S. Department of Justice - Antitrust Division.
- 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.
- 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, 09.
- Maskus, Keith E. & Yongmin Chen, 2000. "Vertical price control and parallel imports - theory and evidence," Policy Research Working Paper Series 2461, The World Bank.
- Alexandrov, Alexei & Deb, Joyee, 2012. "Price discrimination and investment incentives," International Journal of Industrial Organization, Elsevier, vol. 30(6), pages 615-623.
- Valletti, Tommaso M., 2006. "Differential pricing, parallel trade, and the incentive to invest," Journal of International Economics, Elsevier, vol. 70(1), pages 314-324, September.
- Katz, Michael L & Shapiro, Carl, 1985. "Network Externalities, Competition, and Compatibility," American Economic Review, American Economic Association, vol. 75(3), pages 424-40, June.
- Gene M. Grossman & Edwin L.-C. Lai, 2008.
"Parallel imports and price controls,"
RAND Journal of Economics,
RAND Corporation, vol. 39(2), pages 378-402.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Antonietta Angelica Zucconi).
If references are entirely missing, you can add them using this form.