IDEAS home Printed from https://ideas.repec.org/a/bla/sajeco/v73y2005i3p357-362.html
   My bibliography  Save this article

The Economics Of Import Parity Pricing: A Pedagogical Note

Author

Listed:
  • MERLE HOLDEN

Abstract

This paper demonstrates that pricing to import parity is not necessarily prima facie evidence of the exercise of market power. It is shown that in the presence of imports both market structures, perfect competition and monopoly, can price to import parity. If markets can be segmented enabling the firm to discriminate between the export and domestic market it is shown that the imperfectly competitive firm can differentially price. Furthermore, as the number of domestic firms is increased, and if these firms are able to segment the market, the differential between domestic and foreign prices is reduced. The import parity price may or may not be charged in the domestic market. A measure of the exercise of market power is therefore the differential between export parity and the domestic price.

Suggested Citation

  • Merle Holden, 2005. "The Economics Of Import Parity Pricing: A Pedagogical Note," South African Journal of Economics, Economic Society of South Africa, vol. 73(3), pages 357-362, September.
    • Handle: RePEc:bla:sajeco:v:73:y:2005:i:3:p:357-362
    DOI: 10.1111/j.1813-6982.2005.00023.x
    as

    Download full text from publisher

    File URL: https://doi.org/10.1111/j.1813-6982.2005.00023.x
    Download Restriction: no
    File URL: https://libkey.io/10.1111/j.1813-6982.2005.00023.x?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    References listed on IDEAS

    as
    1. James E. Anderson, 1988. "The Relative Inefficiency of Quotas," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262511789, April.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Patrick Conway & Marco Fugazza & M. Kerem Yuksel, 2013. "TURKISH ENTERPRISE-LEVEL RESPONSE TO FOREIGN TRADE LIBERALIZATION: The Removal of Agreements on Textiles and Clothing Quotas," UNCTAD Blue Series Papers 59, United Nations Conference on Trade and Development.
    2. James E. Anderson & J. Peter Neary, 1996. "A New Approach to Evaluating Trade Policy," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 63(1), pages 107-125.
    3. Henk Kox, 2001. "Exposure of the business services industry to international competition," CPB Document 10.rdf, CPB Netherlands Bureau for Economic Policy Analysis.
    4. Kym Anderson, 2003. "Measuring Effects of Trade Policy Distortions: How Far Have We Come?," The World Economy, Wiley Blackwell, vol. 26(4), pages 413-440, April.
    5. Nuno Limão & Patricia Tovar, 2018. "Policy choice: Theory and evidence from commitment via international trade agreements," World Scientific Book Chapters, in: Policy Externalities and International Trade Agreements, chapter 6, pages 179-198, World Scientific Publishing Co. Pte. Ltd..
    6. Hans Haller & Richard Milam, 2010. "Protection at Stake," Korean Economic Review, Korean Economic Association, vol. 26, pages 267-286.
    7. Feestra, R.C. & Lewis, T.R. & Mcmillan, J., 1989. "Designing Policies To Open Trade," Papers 349, California Davis - Institute of Governmental Affairs.
    8. William Kaempfer & Thomas Willett, 1989. "Combining rent-seeking and public choice theory in the analysis of tariffs versus quotas," Public Choice, Springer, vol. 63(1), pages 79-86, October.
    9. Barbara Hutniczak & Niels Vestergaard & Dale Squires, 2019. "Policy Change Anticipation in the Buyback Context," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 73(1), pages 111-132, May.
    10. Anderson, James E & Bannister, Geoffrey J & Neary, J Peter, 1995. "Domestic Distortions and International Trade," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 36(1), pages 139-157, February.
    11. James Harrigan & Geoffrey Barrows, 2009. "Testing the Theory of Trade Policy: Evidence from the Abrupt End of the Multifiber Arrangement," The Review of Economics and Statistics, MIT Press, vol. 91(2), pages 282-294, May.
    12. Anderson, Kym, 2004. "Setting the Trade Policy Agenda: What Roles for Economists?," Working Papers 14574, International Agricultural Trade Research Consortium.
    13. Thomas Grennes, 1989. "The Multifiber Arrangement and the Management of International Textile Trade," Cato Journal, Cato Journal, Cato Institute, vol. 9(1), pages 107-131, Spring/Su.
    14. Jan Jørgensen & Philipp Schröder, 2007. "Effects of Tariffication: Tariffs and Quotas under Monopolistic Competition," Open Economies Review, Springer, vol. 18(4), pages 479-498, September.
    15. William H. Kaempfer & Edward Tower & Thomas D. Willett, 1989. "Performance Contingent Protection," Economics and Politics, Wiley Blackwell, vol. 1(3), pages 261-275, November.
    16. Randi Boorstein & Robert C. Feenstra, 1987. "Quality Upgrading and its Welfare Cost in U.S. Steel Imports, 1969-74," NBER Working Papers 2452, National Bureau of Economic Research, Inc.
    17. Hillman, Jimmye S., 1996. "Nontariff Agricultural Trade Barriers Revisited," Working Papers 14602, International Agricultural Trade Research Consortium.
    18. Collie, David R. & Su, Yu-Tien, 1998. "Trade policy and product variety: when is a VER superior to a tariff?," Journal of Development Economics, Elsevier, vol. 55(1), pages 249-255, February.
    19. Ramos, Maria Priscila, 2007. "Politique Commerciale, Qualité et Environnement: une Application aux Négociations Commerciales entre l’Union Européenne et le Mercosur," MPRA Paper 12640, University Library of Munich, Germany.
    20. Ramos, Maria Priscila & Bureau, Jean-Christophe & Salvatici, Luca, 2007. "Shipping the good beef out: EU trade liberalization to Mercosur exports," Working Papers 7215, TRADEAG - Agricultural Trade Agreements.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:bla:sajeco:v:73:y:2005:i:3:p:357-362. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Wiley Content Delivery (email available below). General contact details of provider: https://edirc.repec.org/data/essaaea.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.