Working Paper No. 702

Wholesale Price Discrimination and Parallel Imports

Published: April 13, 2007Pages: 38Keywords: Vertical Restraints; Parallel Imports; Market Integration; Price Discrimination; Competition PolicyJEL-codes: F15; K21; L14

Wholesale Price Discrimination and Parallel Imports Mattias Ganslandt and Keith E. Maskus


We develop a model of vertical pricing in which an original manufacturer sets wholesale prices in two markets integrated at the distributor level by parallel imports (PI). In this context we show that if competition policy requires uniform wholesale prices across locations it would push retail prices toward convergence as transportation costs fall. However, these retail prices could be higher than those induced without restrictions on prices charged to distributors. Thus, the competition policy may not be optimal for consumer welfare.

 

Interdisciplinary European Studies

The European Union in a Changing World Order

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This book explores how the European Union responds to the ongoing challenges to the liberal international order. These challenges arise both within the EU itself and beyond its borders, and put into question the values of free trade and liberal democracy. 

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