Grey Power: An Empirical Investigation of the Impact of Parallel Imports on Market Prices
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The persistence of price discrimination across international markets with falling costs of unofficial importing is both paradox and policy concern. E-commerce facilitates a “grey” market in parallel imports, particularly for high-value goods such as electronics. This paper explores the impact of unofficial imports on price using a panel of product markets mediated via an Internet shopbot. It finds the presence of an import model lowers prices across the market. However, unlike the refurbished model it is not simply an inferior substitute. The import price discount increases over the model life cycle, suggesting that model-specific preferences fall as each model ages.
Keywordsparallel imports grey market pricing shopbot market
JEL ClassificationL1 F4 L81
The author is indebted to the editor and two referees of this Journal and participants at the 2007 Industrial Organization Society Conference at Charleston, South Carolina, especially Alberto Salvo, for helpful comments on earlier versions of this paper and to Doug Nelson and the US International Trade Commission for assistance on trade issues.
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