TY  - JOUR
AU  - Grossman,Gene M.
AU  - Lai,Edwin C.-L.
TI  - Parallel Imports and Price Controls
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 12423
PY  - 2006
Y2  - August 2006
UR  - http://www.nber.org/papers/w12423
L1  - http://www.nber.org/papers/w12423.pdf
N1  - Author contact info:
Gene M. Grossman
International Economics Section
Department of Economics
Princeton University
Princeton, NJ 08544
Tel: 609/258-4823
Fax: 609/258-1374
E-Mail: grossman@princeton.edu

Edwin Lai
Federal Reserve Bank of Dallas
P O Box 655906
Dallas, TX 75265-5906
Tel: 214-922-6941
Fax: 214-922-5194
E-Mail: elai@ust.hk
M2  - featured in NBER digest on 2006-08-14
AB  - 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.
ER  -