In the traditional economics models, parallel imports prevent a manufacturer from price discrimination involving the same good between countries. As a result, the manufacturer loses profit and tries to discourage parallel imports. The consumers in low-price countries also lose when parallel imports are legalized because the price in such countries increases. When value-added services such as a warranty and technical support are available only for the authorized product (i.e., when services are differentiated), however, the manufacturer may obtain a larger profit with parallel imports, as shown in literature. We extend this study by analyzing the case in which the manufacturer can choose the level of value-added services. It turns out that the manufacturer may even encourage parallel imports when the cost for value-added services is not too low or too high. We also show that the consumers in low-price countries may gain when parallel imports are legalized.
Parallel Imports, their Deterrence and Accommodation with Service Differentiation
The International trade journal ; 31 , 3
2017
Aufsatz (Zeitschrift)
Englisch
Parallel Imports, their Deterrence and Accommodation with Service Differentiation
Online Contents | 2017
|Deterrence failures and deterrence strategies
TIBKAT | 1977
|NTIS | 1980
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