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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.

Suggested Citation

  • Kamal Saggi, 2013. "The regional exhaustion of intellectual property," Vanderbilt University Department of Economics Working Papers 13-00011, Vanderbilt University Department of Economics.
  • Handle: RePEc:van:wpaper:vuecon-13-00011
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    References listed on IDEAS

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    1. Malueg, David A. & Schwartz, Marius, 1994. "Parallel imports, demand dispersion, and international price discrimination," Journal of International Economics, Elsevier, vol. 37(3-4), pages 167-195, November.
    2. Keith E. Maskus, 2000. "Parallel Imports," The World Economy, Wiley Blackwell, vol. 23(9), pages 1269-1284, September.
    3. Szymanski, Stefan & Valletti, Tommaso, 2005. "Parallel Trade, International Exhaustion and Intellectual Property Rights: A Welfare Analysis," CEPR Discussion Papers 5022, C.E.P.R. Discussion Papers.
    4. Wilfred J. Ethier, 1998. "Regionalism in a Multilateral World," Journal of Political Economy, University of Chicago Press, vol. 106(6), pages 1214-1245, December.
    5. Tommaso M. Valletti & Stefan Szymanski, 2006. "PARALLEL TRADE, INTERNATIONAL EXHAUSTION AND INTELLECTUAL PROPERTY RIGHTS: A WELFARE ANALYSIS -super-," Journal of Industrial Economics, Wiley Blackwell, vol. 54(4), pages 499-526, December.
    6. Valletti, Tommaso M., 2006. "Differential pricing, parallel trade, and the incentive to invest," Journal of International Economics, Elsevier, vol. 70(1), pages 314-324, September.
    7. Richardson, Martin, 2002. "An elementary proposition concerning parallel imports," Journal of International Economics, Elsevier, vol. 56(1), pages 233-245, January.
    8. Gene M. Grossman & Edwin L.-C. Lai, 2008. "Parallel imports and price controls," RAND Journal of Economics, RAND Corporation, vol. 39(2), pages 378-402.
    9. 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, vol. 8(2-3), pages 326-353, 04-05.
    10. Pecorino, Paul, 2002. "Should the US allow prescription drug reimports from Canada?," Journal of Health Economics, Elsevier, vol. 21(4), pages 699-708, July.
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    More about this item

    Keywords

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

    JEL classification:

    • F1 - International Economics - - Trade

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