Profit-Enhancing Parallel Imports |
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Authors: | Noriaki Matsushima Toshihiro Matsumura |
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Institution: | (1) Graduate School of Business Administration, Kobe University, Rokkodai 2-1, Nada, Kobe Hyogo, 657-8501, Japan;(2) Institute of Social Science, University of Tokyo, 7-3-1, Hongo, Bunkyo-ku, Tokyo 113-0033, Japan |
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Abstract: | We investigate competition between a domestic intellectual property right holder and a foreign imitator and consider how parallel
imports affect their profits. We consider a two-country model. Country A is a developed country where intellectual property
rights are highly protected, and country B is a developing country where protection is weak. The intellectual property right
holder can sell the products for both markets while the imitator cannot export the products to country A. We find that permitting
parallel imports can be beneficial for both players because it serves as a commitment device to soften price competition. |
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Keywords: | |
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