Parallel Imports, Market Size and Investment Incentive
AbstractWe use a vertical control model with a two-part tariff pricing and a leader-follower competition to investigate some conditions which may prevent the occurrence of parallel importing even when such activity is legally permitted and the effects of parallel importing on the incentive to invest in market development effort for an authorised distributor faced with competition from parallel imported products. We find that parallel imports cannot arise if the target and the source market either differ too greatly or are too similar in size. Also, both the presence of parallel imported products and the threat of such presence reduce the domestic distributor’s market development investment. JEL Classification: L11, F13, 034
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Bibliographic InfoPaper provided by Melbourne Institute of Applied Economic and Social Research, The University of Melbourne in its series Melbourne Institute Working Paper Series with number wp2006n25.
Length: 25 pages
Date of creation: Nov 2006
Date of revision:
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parallel imports; vertical control; intellectual property;
Other versions of this item:
- Alfons Palangkaraya & Jongsay Yong, 2009. "Parallel Imports, Market Size And Investment Incentive," The Singapore Economic Review (SER), World Scientific Publishing Co. Pte. Ltd., vol. 54(02), pages 167-181.
- L11 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Production, Pricing, and Market Structure; Size Distribution of Firms
- F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations
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