Roy, SantanuSaggi, Kamal2012-03-192012-03-192011-09-01https://hdl.handle.net/10986/3566In a North-South vertically differentiated duopoly, the analysis in this paper derives equilibrium government policies towards parallel imports. By incorporating strategic interaction at the policy-setting stage and the product market, the model sheds new light on (i) the effects of parallel import policies on pricing behavior of firms and (ii) the interdependence of national parallel import policies. If demand asymmetry across countries is sufficiently large, the North forbids parallel imports to ensure its firm sells in the South thereby generating international price discrimination -- the South's most preferred market outcome -- as the equilibrium. When demand structures are relatively similar across countries, the North permits parallel imports and uniform pricing -- its most preferred market outcome -- obtains.CC BY 3.0 IGOADVERSE EFFECTARBITRAGECOMPETITORCONSUMER INTERESTSCONSUMER SURPLUSCONSUMERSCONVENTIONAL INSTRUMENTSDEMAND CURVEDEMAND FUNCTIONSDEVELOPING COUNTRIESDEVELOPMENT ECONOMICSDEVELOPMENT POLICYDIFFERENTIAL PRICINGDOMESTIC MARKETDOMESTIC PRICEDUOPOLYECONOMIC INTEGRATIONECONOMIC LAWECONOMIC RESEARCHECONOMICSECONOMICS RESEARCHENTREPRENEURSEQUILIBRIUM PRICEEQUILIBRIUM PRICESEXPANSIONEXPORTSEXTERNALITIESFIRMSFIXED COSTSFOREIGN MARKETFOREIGN MARKETSFUTURE RESEARCHGAME THEORYGLOBAL MARKETHOME MARKETIMPERFECT COMPETITIONINCOMEINCREASING RETURNSINDUSTRIAL ECONOMICSINEFFICIENCYINTELLECTUAL PROPERTYINTELLECTUAL PROPERTY RIGHTINTELLECTUAL PROPERTY RIGHTSINTERNATIONAL MARKETINTERNATIONAL TRADEINVENTORIESMANUFACTURERMARGINAL COSTMARGINAL COSTSMARKET COMPETITIONMARKET DEMANDMARKET ENTRYMARKET EQUILIBRIUMMARKET POWERMARKET PRICESMARKET SEGMENTATIONMARKET STRUCTUREMARKET STRUCTURESMARKETINGMONOPOLIESMONOPOLYMONOPOLY PRICEMONOPOLY PRICESMULTINATIONALSNASH EQUILIBRIUMNATURAL MONOPOLYOLIGOPOLYPATENTSPRICE COMPETITIONPRICE CONTROLPRICE CONTROLSPRICE DISCRIMINATIONPRICE INCREASESPRICE REGULATIONPRICING STRATEGYPRODUCT DIFFERENTIATIONPRODUCT MARKETPRODUCT QUALITYPROFIT MAXIMIZATIONPROPERTY RIGHTSREGULATORY CONDITIONSRETAILSALESALESSURPLUSTRADE POLICYTRADEMARKWORLD ECONOMYWORLD MARKETSWTOWorld Bank10.1596/1813-9450-5802