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Tariff policy and exhaustion of intellectual property rights in the presence of parallel imports

  • Jung Hur
  • Yohanes E. Riyanto

This paper examines an interplay between tariff policy and parallel-import policy. From a welfare point of view, a host government would prefer allowing parallel imports to prohibiting them. However, if a tariff is not at the government's disposal, there will be no parallel imports in equilibrium because a foreign manufacturer would prefer adopting a uniform pricing policy to a discriminatory pricing policy, which will prevent parallel imports from occurring. If a tariff is at the government's disposal, it can be set optimally to induce the foreign manufacturer to impose a price discrimination policy. Such a policy will facilitate entry by a parallel importer provided that parallel imports are feasible. Copyright 2006, Oxford University Press.

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File URL: http://hdl.handle.net/10.1093/oep/gpl013
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Article provided by Oxford University Press in its journal Oxford Economic Papers.

Volume (Year): 58 (2006)
Issue (Month): 3 (July)
Pages: 549-568

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Handle: RePEc:oup:oxecpp:v:58:y:2006:i:3:p:549-568
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