A Guide for Students and Teachers
Edited by Richard Watt
Chapter 16: Copyright and parallel trade
This chapter investigates the economics of copyright in the context of parallel trade (also termed parallel imports or gray-market imports) and provides an overview of the literature on parallel trade. In all that follows, it mainly draws on Correa (2007), Fink (2005), Ganslandt and Maskus (2004), Gervais (2003), Maskus (2000a & b, 2001), Maskus and Chen (2004), Mueller-Langer (2009), Szymanski and Valletti (2005), and Valletti and Szymanski (2006). A parallel-imported product is a legitimately manufactured product under intellectual property protection that is first placed into circulation in one country, and then is imported to a second country without the consent of the owner of the intellectual property rights (IPRs) such as copyrights that are attached to the product in the second country. In contrast to pirated copyright-protected or counterfeited products, parallel-imported products are legitimate products. However, they may not carry the original producer’s warranty and may be packaged differently. Moreover, parallel-importing firms ordinarily purchase legitimate (copyright) products in low-price markets and then re-direct them to high-price markets (arbitrage between markets). The regulation of parallel trade is a fiercely debated issue in the global trading system as the welfare effects of parallel trade are ambiguous (Barfield and Groombridge, 1998; Mueller-Langer, 2012).
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