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Parallel Imports, Innovations And National Welfare: The Role Of The Sizes Of Income Classes And National Markets For Health Care

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Listed:
  • RAJAT ACHARYYA

    (Department of Economics, Jadavpur University, Kolkata 700032, India)

  • MARÍA D.C. GARCÍA-ALONSO

    (Department of Economics, University of Kent, Kent CT12 7NP, United Kingdom)

Abstract

This paper shows that regardless of any intra-country income differences, parallel imports result in a lower level of health-care innovation but, contrary to popular as well as conventional theoretical wisdom, alower pricein the Third World compared to market-based discrimination. Despite such a lower price, however, parallel imports unambiguously make all buyers in the Third World worse off when intra-country income disparity exists. On the other hand, even discarding the MNC's profit, there will be cases in which the richer country prefers price discrimination as well. That is, in those cases, no countries will have any incentive under the welfare criterion to undo price discrimination, contrary to Richardson (2002).

Suggested Citation

  • Rajat Acharyya & María D.C. García-Alonso, 2008. "Parallel Imports, Innovations And National Welfare: The Role Of The Sizes Of Income Classes And National Markets For Health Care," The Singapore Economic Review (SER), World Scientific Publishing Co. Pte. Ltd., vol. 53(01), pages 57-79.
    • Handle: RePEc:wsi:serxxx:v:53:y:2008:i:01:n:s0217590808002847
    DOI: 10.1142/S0217590808002847
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    References listed on IDEAS

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    1. Acharyya, Rajat, 2004. "Product Standards, Exports and Employment An Analytical Study," MPRA Paper 30160, University Library of Munich, Germany.
    2. Rajat Acharyya, 2005. "Product Standards, Exports and Employment," Contributions to Economics, Springer, number 978-3-7908-1596-2, September.
    3. Stefan Szymanski & Tommaso Valletti, 2005. "Parallel trade, price discrimination, investment and price caps [‘First report (final) to the Committee on International Trade Law of the International Law Association on the subject of parallel im," Economic Policy, CEPR, CESifo, Sciences Po;CES;MSH, vol. 20(44), pages 706-749.
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    1. Rajat Acharyya & María D.C. García-Alonso, 2012. "Parallel imports, drug innovation and international patent protection: A policy game," The Journal of International Trade & Economic Development, Taylor & Francis Journals, vol. 21(6), pages 865-894, November.
    2. Rajat Acharyya & Maria D.C. Garcia-Alonso, 2009. "Weak IPR and Imitation in the South and International Exhaustion of Patent Rights in the North for Innovated Drugs: A Policy Game," Studies in Economics 0919, School of Economics, University of Kent.
    3. Rajat Acharyya & María D. C. García-Alonso, 2014. "Universal Access, Parallel Trade And Incentives To Innovate," Bulletin of Economic Research, Wiley Blackwell, vol. 66(S1), pages 74-91, December.
    4. Chatterjee, Tonmoy & Gupta, Kausik, 2016. "Health Care Quality, Income Transfer and International Trade: A Theoretical Analysis," MPRA Paper 73128, University Library of Munich, Germany.
    5. Rajat Archaryya & María del Carmen García-Alonso, 2009. "Health Systems, Inequality and Incentives to Innovate," Studies in Economics 0902, School of Economics, University of Kent.
    6. Sunandan Ghosh, 2018. "Parallel Imports, Product Quality and Endogenous Trading Bloc Formation," Economics Bulletin, AccessEcon, vol. 38(3), pages 1415-1427.

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