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

Authors: Hur, Jung; Riyanto, Yohanes E.

Source: Oxford Economic Papers, Volume 58, Number 3, July 2006 , pp. 549-568(20)

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Abstract:

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.

Keywords: JEL classification: D43; F13; L11

Document Type: Research article

DOI: http://dx.doi.org/10.1093/oep/gpl013

Publication date: 2006-07-01

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Oxford Economic Papers is a general economics journal, publishing refereed papers in economic theory, applied economics, econometrics, economic development, economic history, and the history of economic thought. It occasionally publishes survey articles in addition to original papers. Books are not reviewed, but substantial review articles are considered. The journal occasionally publishes survey articles in addition to original papers, and occasionally publishes special issues or symposia.