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 and the Return of the Nation State

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This book explores the complex and ever-changing relationship between the European Union and its member states. The recent surge in tension in this relationship has been prompted by the actions of some member state governments as they question fundamental EU values and principles and refuse to implement common decisions seemingly on the basis of narrowly defined national interests.

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