Why Does the US Prevent Parallel Imports?

Yih-Ming Lin^*

Department of Applied Economics, National Chiayi University, Chiayi.

DOI: 10.4236/tel.[phone]                

Abstract

Most studies on parallel trade conclude that parallel imports, in general, benefit the importing country because it lowers the price of parallel imports and benefits to the consumers in the importing country. Richardson [1] explicitly indicates that there is no importing country not to permit parallel imports because they are discriminated against in its absence. However, an obvious counter example is observed in the US. In this paper, we propose a two-country model of parallel trade with innovation to explain why some countries, such as the US would like to prevent parallel imports. We show that the elasticity of innovation is crucial to the welfare of importing country and global welfare.

 

Keywords

Parallel Imports; Welfare; Innovation

Conflicts of Interest

The authors declare no conflicts of interest.

References

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