Work

Parallel Imports and Price Controls

Year: 2006

Type: article

Abstract: Price controls create opportunities for international arbitrage.Many have argued that such arbitrage, if tolerated, will undermine intellectual property rights and dull the incentives for investment in research-intensive industries such as pharmaceuticals.We challenge this orthodox view and show, to the contrary, that the pace of innovation often is faster in a world with international exhaustion of intellectual property rights than in one with national exhaustion.The key to our conclusion is to recognize that governments will make different choices of price controls when parallel imports are allowed by their trade partners than they will when they are not.

Source: The RAND Journal of Economics

DOI: 10.1111/j.0741-6261.2008.00019.x

Authors: Gene M. Grossman, Edwin L.‐C. Lai

Institutions: Princeton University, Hong Kong University of Science and Technology, Federal Reserve Bank of Dallas

Language: English

Topic: Pharmaceutical Economics and Policy

Subfield: Economics and Econometrics

Field: Economics, Econometrics and Finance

Domain: Social Sciences

SDG: Peace, justice, and strong institutions

Open Access status: green

Funder: National Science Foundation