Mueller-Langer, Frank (2009): Does parallel trade freedom harm consumers in small markets? Published in: Croatian Economic Survey , Vol. 1, No. 11 (15. April 2009): pp. 11-41.
Download (574Kb) | Preview
Countries can freely decide whether to permit or ban parallel trade. Article 6 of the Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS Agreement) – being the only provision in the various international agreements on intellectual property rights that deals with the treatment of parallel trade – preserves the territorial privilege for regulating parallel trade. In a parallel trade model with two heterogeneous countries in terms of market size, we address the question as to whether parallel trade freedom is beneficial or detrimental from a consumer’s perspective. In particular, the model suggests that parallel trade freedom is detrimental to consumers in the country with the smaller market as less of a certain product is sold at a higher price. However, parallel trade freedom is likely to be beneficial to consumers in the country with the larger market. We also find that the smaller country, in terms of market size, will remain unserved under parallel trade freedom if the second country is sufficiently attractive in terms of market size.
|Item Type:||MPRA Paper|
|Original Title:||Does parallel trade freedom harm consumers in small markets?|
|Keywords:||Parallel trade; economic analysis of intellectual property rights|
|Subjects:||K - Law and Economics > K3 - Other Substantive Areas of Law > K33 - International Law
O - Economic Development, Technological Change, and Growth > O3 - Technological Change; Research and Development; Intellectual Property Rights > O34 - Intellectual Property Rights
|Depositing User:||Frank Müller-Langer|
|Date Deposited:||20. Jul 2012 18:27|
|Last Modified:||12. Feb 2013 17:51|
Abbott, Frederick M., 1998, “First Report (Final) to the Committee on International Trade Law of the International Law Association on the Subject of Parallel Importation”, Journal of International Economic Law, 1(4), pp. 607-636.
Barfield, Claude E. and Mark A. Groombridge, 1998, “The Economic Case for Copyright Owner Control over Parallel Imports”, Journal of World Intellectual Property, 1(6), pp. 903-939.
Barnard, Catherine, 2004, The Substantive Law of the EU - The Four Freedoms, New York, NJ: Oxford University Press.
Batson, Amie, 1998, “Win-Win Interactions between the Public and Private Sectors”, Nature Medicine: Vaccine Supplement, 4(5), pp. 487-491.
Chard, John S. and Christopher J. Mellor, 1989, “Intellectual Property Rights and Parallel Imports”, World Economy, 12(1), pp. 69-83.
Commission on Intellectual Property Rights, 2002, Integrating Intellectual Property Rights and Development Policy, Report of the Commission on Intellectual Property Rights, London: Commission on Intellectual Property Rights.
Danzon, Patricia M., 1997, Pharmaceutical Price Regulation, Washington, DC: American Enterprise Institute Press.
Danzon, Patricia M., 1998, “The Economics of Parallel Trade”, PharmacoEconomics, 13(3), pp. 293-304.
Danzon, Patricia M. and Adrian Towes, 2003, “Differential Pricing for Pharmaceuticals: Reconciling Access, R&D and Patents”, International Journal of Health Care Finance and Economics, 3(3), pp. 183-205.
Darbà, Josep and Joan Rovira, 1998, “Parallel Imports of Pharmaceuticals in the European Union”, PharmacoEconomics, 14(1), pp. 129-136.
Fink, Carsten, 2005, “Entering the Jungle of Intellectual Property Rights Exhaustion and Parallel Importation” in Carsten Fink and Keith E. Maskus, eds., Intellectual Property and Development: Lessons from Recent Economic Research, pp. 171-188, Washington, DC: World Bank and Oxford University Press.
Gallini, Nancy T. and Aidan Hollis, 1999, “A Contractual Approach to the Gray Market”, International Review of Law and Economics, 19(1), pp. 1-21.
Ganslandt, Mattias and Keith E. Maskus, 2004, “Parallel Imports and the Pricing of Pharmaceutical Products: Evidence from the European Union”, Journal of Health Economics, 23(5), pp. 1035-1057.
Ganslandt, Mattias, Keith E. Maskus and Eina V. Wong, 2005, “Developing and Distributing Essential Medicines to Poor Countries: The Defend Proposal” in Carsten Fink and Keith E. Maskus, eds., Intellectual Property and Development: Lessons from Recent Economic Research, pp. 207-223, Washington, DC: World Bank and Oxford University Press.
Garrison, Christopher, 2006, Exceptions to Patent Rights in Developing Countries, Geneva: UNCTAD - ICTSD Project on IPRs and Sustainable Development, Paper No. 17.
Gervais, Daniel, 2003, The TRIPS Agreement: Drafting History and Analysis, London: Sweet Maxwell.
Graham, John R. and Beverley A. Robson, 2000, Prescription Drug Pricing in Canada and the United States - Part 1: A Comparative Survey, Public Policy Sources, Occasional Paper 42, Vancouver: Fraser Institute.
Hausman, Jerry A. and Jeffrey K. MacKie-Mason, 1988, "Price Discrimination and Patent Policy", RAND Journal of Economics, 19(2), pp. 253-265.
Jelovac, Izabela and Catalina Bordoy, 2005, “Pricing and Welfare Implications of Parallel Imports in the Pharmaceutical Industry”, International Journal of Health Care Finance and Economics, 5(1), pp. 5-21.
Kanavos, Panos and Joan Costa-i-Font, 2005, “Pharmaceutical Parallel Trade in Europe: Stakeholder and Competition Effects”, Economic Policy, 20(44), pp. 751- 798.
Kanavos, Panos, Joan Costa-i-Font, Sherry Merkur and Marin Gemill, 2004, The Economic Impact of Pharmaceutical Parallel Trade in European Union Member States: A Stakeholder Analysis, London: Special Research Paper, LSE Health and Social Care.
Kremer, Michael, 2002, “Pharmaceuticals and the Developing World”, Journal of Economic Perspectives, 16(4), pp. 67-90.
Li, Changying and Keith E. Maskus, 2006, “The Impact of Parallel Imports on Investments in Cost-reducing Research and Development”, Journal of International Economics, 68(2), pp. 443-455.
Malueg, David A. and Marius Schwartz, 1994, “Parallel Imports, Demand Dispersion, and International Price Discrimination”, Journal of International Economics, 37(3/4), pp. 167-195.
Maskus, Keith E., 2000a, Intellectual Property Rights in the Global Economy, Washington, DC.: Institute for International Economics.
Maskus, Keith E., 2000b, “Parallel Imports”, World Economy, 23(9), pp. 1269-1284.
Maskus, Keith E., 2001, Parallel Imports in Pharmaceuticals: Implications for Competition and Prices in Developing Countries, Geneva: World Intellectual Property Organization.
Maskus, Keith E. and Yongmin Chen, 2002, “Parallel Imports in a Model of Vertical Distribution: Theory, Evidence, and Policy”, Pacific Economic Review, 7(2), pp. 319-334.
Maskus, Keith E. and Yongmin Chen, 2004, “Vertical Price Control and Parallel Imports: Theory and Evidence”, Review of International Economics, 12(4), pp. 551-570.
Maskus, Keith E. and Yongmin Chen, 2005, “Parallel Imports in a Model of Vertical Distribution: Theory, Evidence, and Policy” in Carsten Fink and Keith E. Maskus, eds., Intellectual Property and Development, Lessons from Recent Economic Research, pp. 189-206, Washington, DC: World Bank and Oxford University Press.
Maskus, Keith E. and Mattias Ganslandt, 2002, “Parallel Trade in Pharmaceutical Products: Implications for Procuring Medicines for Poor Countries” in Brigitte Granville, ed., The Economics of Essential Medicines, pp. 57-80, London: Royal Institute of International Affairs.
Mueller-Langer, Frank, 2008, “An Analysis of the Welfare Effects of Parallel Trade Freedom”, Berkeley Electronic Press, German Working Papers in Law and Economics, 2008(9), http://www.bepress.com/gwp/default/vol2008/iss1/art9.
Mueller-Langer, Frank, 2009, Creating R&D Incentives for Medicines for Neglected Diseases, Wiesbaden: Gabler.
NERA, S. J. Berwin & Co., and IFF Research, 1999, The Economic Consequences of the Choice of Regime of Exhaustion in the Area of Trademarks, Final Report for DG XV of the EC, London: National Economic Research Associates.
OECD, 2002, OECD Health Data 2002: A Comparative Analysis of 30 Countries, Paris: Organisation for Economic Cooperation and Development.
Palia, Aspy P. and Charles F. Keown, 1991, “Combating Parallel Importing: Views of US Exporters to the Asian-Pacific Region”, International Marketing Review, 8(1), pp. 47-56.
Rey, Patrick, 2003, The Impact of Parallel Imports on Prescription Medicines, Toulouse: IDEI, University of Toulouse.
Richardson, Martin, 2002, “An Elementary Proposition Concerning Parallel Imports”, Journal of International Economics, 56(1), pp. 233-245.
Robinson, Joan, 1933, Economics of Imperfect Competition, London: Macmillan.
Scherer, Frederic M., 1980, Industrial Market Structure and Economic Performance, Chicago: Rand McNally.
Scherer, Frederic M. and Jayashree Watal, 2002a, “The Economics of TRIPS Options for Access to Medicines” in Brigitte Granville, ed., The Economics of Essential Medicines, pp. 32-56, London: Royal Institute of International Affairs.
Scherer, Frederic M. and Jayashree Watal, 2002b, “Post-TRIPS Options for Access to Patented Medicines in Developing Nations”, Journal of International Economic Law, 5(4), pp. 913-939.
Schmalensee, Richard, 1981, “Output and Welfare Implications of Monopolistic Third-degree Price Discrimination”, American Economic Review, 71(1), pp. 242-247.
Smits, René, 2006, “On Parallel Trade and Preliminary Issues - A Healthy Approach to Competition Law Enforcement?”, Legal Issues of Economic Integration, 33(1), pp. 61-83.
Sykes, Alan O., 2002, “TRIPS, Pharmaceuticals, Developing Countries, and the Doha “Solution””, Chicago Journal of International Law, 3(1), pp. 47-68.
Szymanski, Stefan and Tommaso M. Valletti, 2005, “Parallel Trade, Price Discrimination, Investment and Price Caps”, Economic Policy, 20(44), pp. 705-749.
Tarr, David G., 1985, An Economic Analysis of Grey Market Imports, Washington, DC: U.S. Federal Trade Commission.
Thorpe, Phil, 2002, Study on the Implementation of the TRIPS Agreement by Developing Countries, Study Paper No.7, London: U.K. Commission on Intellectual Property Rights.
Valletti, Tommaso M., 2006, “Differential Pricing, Parallel Trade, and the Incentive to Invest”, Journal of International Economics, 7(1), pp. 314-324.
Valletti, Tommaso M. and Stefan Szymanski, 2006, “Parallel Trade, International Exhaustion and Intellectual Property Rights: A Welfare Analysis”, Journal of Industrial Economics, 54(4), pp. 499-526.
Varian, Hal R., 1985, “Price Discrimination and Social Welfare”, American Economic Review, 75(4), pp. 870-875.
Wagener, Hans-Jürgen, Thomas Eger and Heiko Fritz, 2006, Europäische Integration -Recht und Ökonomie, Geschichte und Politik (European Integration - Law and Economics, History and Politics), Munich: Valen.
Watal, Jayashree, 2001, Intellectual Property Rights in the WTO and Developing Countries, Den Haag: Kluwer Law International.
World Health Organization and World Trade Organization, 2002, “Differential Pricing and the Financing of Essential Drugs” in Brigitte Granville, ed., The Economics of Essential Medicines, pp. 209-231, London: Royal Institute of International Affairs.
York Health Economics Consortium, 2003, Benefits to Payers and Patients from Parallel Trade, University of York.
Yusuf, Abdulquawi A. and Andrés Moncayo von Hase, 1992, “Intellectual Property Protection and International Trade: Exhaustion of Rights Revisited”, World Competition, 16(1), pp. 115-131.