Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/81303
Authors: 
Ganslandt, Mattias
Maskus, Keith E.
Year of Publication: 
2007
Series/Report no.: 
IFN Working Paper 702
Abstract: 
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.
Subjects: 
Vertical Restraints
Parallel Imports
Market Integration
Price Discrimination
Competition Policy
JEL: 
F15
K21
L14
Document Type: 
Working Paper

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