Parallel Imports, Quality Differentiation, and Product Piracy in a North-South Model

Ichino, Yasukazu

doi:10.2139/ssrn.622041

Cited by 3 publications

(10 citation statements)

References 7 publications

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“…There are other dimensions in which the present analysis differs from that of Ichino (2004). First, observing the price-setting power of the Indian pharmaceutical Þr m se v e nf o rt h ei m i t a t e dd r u g s ,w ea s s u m eas i n g l ep o t e n t i a l imitator instead of perfectly competitive imitators.…”

Section: Introductionmentioning

confidence: 92%

“…The two cases speciÞed in the above lemma exhaust all the possibilities regarding the implications of the policy game between the governments, irrespective of how large the cross-country income differences are within the limit for which both the markets are served by the MNC. Note that F<F * p,root < F D would corresponds to Ichino's (2004) policy game, extended to endogenous innovation decision. Figure 3 represents the payoff matrix for countries to summarize the notation for all the possible welfare levels under Lemma 6.…”

Section: [I N S E R Tf I G U R E1h E R E ] [I N S E R Tf I G U R E2h mentioning

confidence: 99%

“…As the proÞt of the MNC is lower under uniform pricing, PI or international exhaustion of patent rights ex ante lowers the level of innovation of a new drug. 4 ,5 To best of our knowledge, the only paper that links these two literatures and provides a benchmark for the present paper is that of Ichino (2004). He considers a policy game between a low-income country choosing over allowing or not allowing piracy and a high-income country choosing over allowing or not allowing PI.…”

Section: Introductionmentioning

confidence: 99%

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Parallel imports, drug innovation and international patent protection: A policy game

Acharyya¹,

Garcia-Alonso²

2012

The Journal of International Trade & Economic Development

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We consider a policy game between a high-income country hosting a drug innovator and a low-income country hosting a drug imitator. The low-income country chooses whether to enforce an International Patent Regime (strict IPR) or not (weak IPR) and the high-income country chooses whether to allow parallel imports (PI) of on-patent drugs or market based discrimination (MBD). We show that, for a moderately high imitation cost, both (Strict IPR, PI) and (Weak IPR, MBD) emerge as the Subgame Perfect Nash Equilibrium (SPNE) policy choices. For relatively smaller imitation costs, (Weak IPR, MBD) is the unique SPNE policy choice. The welfare properties reveal that although innovation may be higher at the (Strict IPR, PI) policy regime, the market coverage and national welfare of the low-income country, and the total welfare are all lower. This opens up the efficiency issue of implementing TRIPS and at the same time allowing international exhaustion of patent rights. JEL ClassiÞcation: D4, L1, I1. Keywords: Income Inequality; Intellectual Property Rights; India; TRIPS; Parallel Imports; Pharmaceuticals; * We would like to acknowledge Þnancial support from the British Academy Grant number SG-50473 and the University of Kent Small Faculty Grants. We thank Kaushik Basu, Sugato Bhattacharyya, Javier Coto, Jagjit Chadha, Martin Jensen, Sugata Marjit, Indrajit Ray, Mathan Satchi and seminar participants at University of Birmingham, University of Kent, Centre for Studies in Social Sciences, Kolkata and Imperial College for their comments and suggestions on an earlier version of the paper. We would also like to thank two anonymous referees for their helpful suggestions. The usual disclaimer applies, however.

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Section: Introductionmentioning

confidence: 92%

Section: [I N S E R Tf I G U R E1h E R E ] [I N S E R Tf I G U R E2h mentioning

confidence: 99%

Section: Introductionmentioning

confidence: 99%

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Parallel imports, drug innovation and international patent protection: A policy game

Acharyya¹,

Garcia-Alonso²

2012

The Journal of International Trade & Economic Development

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“…The theoretical literature on patent policy, imitation and innovation, on the one hand, and on PI, innovation and welfare, on the other hand, have been quite exhaustive but disjoint except for the study by Ichino (2004). In the literature on imitation and innovation, two recent papers have some relevance for our analysis.…”

Section: The Important Policy Issue That We Are Primarily Concerned Wmentioning

confidence: 99%

“…As the proÞto ft h eM N Ci slo w e r under uniform pricing, parallel imports or international exhaustion of patent rights ex ante lowers the level of innovation of a new drug. 6 The only paper, to best of our knowledge, that links these two literature and provides a benchmark for the issue raised here is that of Ichino (2004). He considers a policy game between a low-income country choosing over allowing and not allowing piracy and a high-income country choosing over allowing and not allowing PI.…”

Section: The Important Policy Issue That We Are Primarily Concerned Wmentioning

confidence: 99%

Income based price subsidies and parallel imports

Acharyya

Garcia-Alonso

2012

International Review of Economics & Finance

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Does Tariff Induce Intellectual Property Right Protection and Reduce Incidence of Piracy?

Acharyya

Banerjee

2016

Rev International Economics

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We consider a model with North exporting a copyrighted product to South where there is IPR violation, and South exports a basic good to North. We examine the impact of North's imposition of import tariff on South's monitoring of IPR violation and the incidence of piracy. If South values IPR compliance “lowly”, then tariff imposition do not alter the pre‐tariff no monitoring equilibrium outcome but unambiguously raises the incidence of piracy. If IPR compliance is valued “highly” then tariff either switches the equilibrium outcome from not monitoring to monitoring or increases its rate. However, the incidence of piracy may increase.

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Parallel Imports, Quality Differentiation, and Product Piracy in a North-South Model

Cited by 3 publications

References 7 publications

Parallel imports, drug innovation and international patent protection: A policy game

Parallel imports, drug innovation and international patent protection: A policy game

Income based price subsidies and parallel imports

Does Tariff Induce Intellectual Property Right Protection and Reduce Incidence of Piracy?

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