Journal Article

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

Jung Hur and Yohanes E. Riyanto

in Oxford Economic Papers

Volume 58, issue 3, pages 549-568
Published in print July 2006 | ISSN: 0030-7653
Published online July 2006 | e-ISSN: 1464-3812 | DOI: http://dx.doi.org/10.1093/oep/gpl013
Tariff policy and exhaustion of intellectual property rights in the presence of parallel imports

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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

Journal Article.  7939 words.  Illustrated.

Subjects: Economics

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