Intellectual Property Rights, Parallel Imports and Strategic Behavior
AbstractThe existence of parallel imports (PI) raises a number of interesting policy and strategic questions, which are the subject of this survey article. For example, parallel trade is essentially arbitrage within policy-integrated markets of IPR-protected goods, which may have different prices across countries. Thus, we analyze fully two types of price differences that give rise to such arbitrage. First is simple retail-level trade in horizontal markets because consumer prices may differ. Second is the deeper, and more strategic, issue of vertical pricing within the common distribution organization of an original manufacturer selling its goods through wholesale distributors in different markets. This vertical price control problem presents the IPR-holding firm a menu of strategic choices regarding how to compete with PI. Another strategic question is how the existence of PI might affect incentives of IPR holders to invest in research and development (R&D). The global research-based pharmaceutical firms, for example, strongly oppose any relaxation of restrictions against PI of drugs into the United States, arguing that the potential reduction in profits would diminish their ability to innovate. There is a close linkage here with price controls for medicines, which are a key component of national health policies but can give rise to arbitrage through PI. We also discuss the complex economic relationships between PI and other forms of competition policy, or attempts to limit the abuse of market power offered by patents and copyrights. Finally, we review the emerging literature on how policies governing PI may affect international trade agreements.
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 Research Institute of Industrial Economics in its series Working Paper Series with number 704.
Length: 46 pages
Date of creation: 12 Mar 2007
Date of revision:
Contact details of provider:
Postal: Research Institute of Industrial Economics, Box 55665, SE-102 15 Stockholm, Sweden
Phone: +46 8 665 4500
Fax: +46 8 665 4599
Web page: http://www.ifn.se/
More information through EDIRC
IPR; Parallel Imports; International Arbitrage; Research and Development;
Find related papers by JEL classification:
- F15 - International Economics - - Trade - - - Economic Integration
- K21 - Law and Economics - - Regulation and Business Law - - - Antitrust Law
- L14 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Transactional Relationships; Contracts and Reputation
This paper has been announced in the following NEP Reports:
- NEP-ALL-2007-06-11 (All new papers)
- NEP-COM-2007-06-11 (Industrial Competition)
- NEP-CSE-2007-06-11 (Economics of Strategic Management)
- NEP-IPR-2007-06-11 (Intellectual Property Rights)
- NEP-LAW-2007-06-11 (Law & Economics)
You can help add them by filling out this form.
CitEc Project, subscribe to its RSS feed for this item.
- Reto Foellmi & Christian Hepenstrick & Josef Zweimüller, 2010.
"Non-homothetic preferences, parallel imports and the extensive margin of international trade,"
IEW - Working Papers
497, Institute for Empirical Research in Economics - University of Zurich.
- Foellmi, Reto & Hepenstrick, Christian & Zweimüller, Josef, 2010. "Non-homothetic preferences, parallel imports and the extensive margin of international trade," CEPR Discussion Papers 7939, C.E.P.R. Discussion Papers.
- Föllmi, Reto & Hepenstrick, Christian & Zweimüller, Josef, 2011. "Non-homothetic preferences, parallel imports and the extensive margin of international trade," Economics Working Paper Series 1122, University of St. Gallen, School of Economics and Political Science.
- Reto Foellmi & Christian Hepenstrick & Josef Zweimüller, 2010. "Non-homothetic preferences, parallel imports and the extensive margin of international trade," Diskussionsschriften dp1009, Universitaet Bern, Departement Volkswirtschaft.
- Acharyya, Rajat & García-Alonso, María D.C., 2012.
"Income based price subsidies and parallel imports,"
International Review of Economics & Finance,
Elsevier, vol. 22(1), pages 25-41.
- Stähler, Frank & Maskus, Keith, 2013. "Retailers as agents: why parallel trade does not work," Annual Conference 2013 (Duesseldorf): Competition Policy and Regulation in a Global Economic Order 79737, Verein für Socialpolitik / German Economic Association.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Elisabeth Gustafsson).
If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.
If references are entirely missing, you can add them using this form.
If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.
If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.
Please note that corrections may take a couple of weeks to filter through the various RePEc services.