Parallel Imports, their Deterrence and Accommodation with Service Differentiation
- Authors
- Yun, S.
- Issue Date
- Jan-2017
- Publisher
- Taylor and Francis Inc.
- Keywords
- Parallel imports; price discrimination; service differentiation
- Citation
- International Trade Journal, v.31, no.3, pp.217 - 231
- Indexed
- SCOPUS
- Journal Title
- International Trade Journal
- Volume
- 31
- Number
- 3
- Start Page
- 217
- End Page
- 231
- URI
- https://scholarworks.bwise.kr/erica/handle/2021.sw.erica/11663
- DOI
- 10.1080/08853908.2016.1269700
- ISSN
- 0885-3908
- Abstract
- 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. © 2017 Taylor & Francis Group, LLC.
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