IDEAS home Printed from https://ideas.repec.org/a/bla/worlde/v42y2019i4p1224-1233.html
   My bibliography  Save this article

Parallel trade with an endogenous market structure

Author

Listed:
  • Pei‐Cyuan Shih
  • Hong Hwang
  • Cheng‐Hau Peng

Abstract

This paper sets up a two‐country model in which there is one domestic manufacturer authorising its product to a distributor in the foreign country. The distributor can sell the product not only to its own market (i.e., the foreign market) but also back to the domestic market. The latter is called parallel trade (PT). The paper investigates the effects of PT on the profits of the manufacturer and social welfare if the domestic market structure is endogenously determined. It is found that PT should be encouraged rather than banned as it increases not only the profits of the manufacturer but also the welfare of both the domestic and the foreign countries.

Suggested Citation

  • Pei‐Cyuan Shih & Hong Hwang & Cheng‐Hau Peng, 2019. "Parallel trade with an endogenous market structure," The World Economy, Wiley Blackwell, vol. 42(4), pages 1224-1233, April.
  • Handle: RePEc:bla:worlde:v:42:y:2019:i:4:p:1224-1233
    DOI: 10.1111/twec.12727
    as

    Download full text from publisher

    File URL: https://doi.org/10.1111/twec.12727
    Download Restriction: no

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:bla:worlde:v:42:y:2019:i:4:p:1224-1233. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Wiley Content Delivery). General contact details of provider: http://www.blackwellpublishing.com/journal.asp?ref=0378-5920 .

    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.

    We have no references for this item. You can help adding them by using 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 RePEc Author Service 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.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.