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The regional exhaustion of intellectual property

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  • Kamal Saggi

    ()
    (Vanderbilt University)

Abstract

This paper analyzes the causes and consequences of regional exhaustion of intellectual property, a policy regime under which a set of countries permit parallel imports from one another but not from the rest of the world. A three-country model is developed in which two high-income countries jointly choose their common exhaustion policy among national (NE), international (IE), or regional exhaustion (RE). The key result is that the two high-income countries choose to implement RE when they are relatively similar to each other and sufficiently high-income relative to the third country. We also consider a scenario where the policy choice set is restricted to non-discriminatory exhaustion regimes (i.e. NE or IE). Comparing the policy outcome of this constrained scenario with that of the core model, we show that the option to choose RE makes all countries better off.

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Bibliographic Info

Paper provided by Vanderbilt University Department of Economics in its series Vanderbilt University Department of Economics Working Papers with number 13-00011.

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Date of creation: 14 Jul 2013
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Handle: RePEc:van:wpaper:vuecon-13-00011

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Web page: http://www.vanderbilt.edu/econ/wparchive/index.html

Related research

Keywords: Regional Exhaustion of IPRs; National Exhaustion; International Exhaustion; Parallel imports; Market power; Welfare;

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  1. Roy, Santanu & Saggi, Kamal, 2012. "Equilibrium parallel import policies and international market structure," Journal of International Economics, Elsevier, Elsevier, vol. 87(2), pages 262-276.
  2. Keith E. Maskus, 2000. "Parallel Imports," The World Economy, Wiley Blackwell, Wiley Blackwell, vol. 23(9), pages 1269-1284, 09.
  3. Tommaso Valletti & Stefan Szymanski, 2006. "Parallel Trade, International Exhaustion and Intellectual Property Rights: A Welfare Analysis," CEIS Research Paper, Tor Vergata University, CEIS 75, Tor Vergata University, CEIS.
  4. Pinelopi Koujianou Goldberg, 2010. "Alfred Marshall Lecture Intellectual Property Rights Protection in Developing Countries: The Case of Pharmaceuticals," Journal of the European Economic Association, MIT Press, MIT Press, vol. 8(2-3), pages 326-353, 04-05.
  5. Pecorino, Paul, 2002. "Should the US allow prescription drug reimports from Canada?," Journal of Health Economics, Elsevier, Elsevier, vol. 21(4), pages 699-708, July.
  6. Wilfred J. Ethier, 1998. "Regionalism in a Multilateral World," Journal of Political Economy, University of Chicago Press, University of Chicago Press, vol. 106(6), pages 1214-1245, December.
  7. Malueg, D.A. & Schwartz, M., 1993. "Parallel Imports, Demand Dispersion and International Price Discrimination," Papers, U.S. Department of Justice - Antitrust Division 93-6, U.S. Department of Justice - Antitrust Division.
  8. Valletti, Tommaso M., 2006. "Differential pricing, parallel trade, and the incentive to invest," Journal of International Economics, Elsevier, Elsevier, vol. 70(1), pages 314-324, September.
  9. Gene M. Grossman & Edwin L.-C. Lai, 2008. "Parallel imports and price controls," RAND Journal of Economics, RAND Corporation, RAND Corporation, vol. 39(2), pages 378-402.
  10. Kamal Saggi & Santanu Roy, 2011. "Strategic Competition and Optimal Parallel Import Policy," Vanderbilt University Department of Economics Working Papers, Vanderbilt University Department of Economics 1117, Vanderbilt University Department of Economics.
  11. Richardson, Martin, 2002. "An elementary proposition concerning parallel imports," Journal of International Economics, Elsevier, Elsevier, vol. 56(1), pages 233-245, January.
  12. Gene M. Grossman & Edwin C.-L. Lai, 2006. "Parallel Imports and Price Controls," NBER Working Papers 12423, National Bureau of Economic Research, Inc.
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