The impact of parallel trade on innovation in R&D-intensive industries, such as pharmaceuticals, is a hotly debated question in antitrust and IP policy. The well known argument that parallel trade dampens innovation by undermining firms' ability to price discriminate has been challenged by...

We consider the welfare effect of parallel imports under the possibility of piracy, by constructing a model of the monopoly firm selling its product in a developed country and in a developing country. We show that parallel imports does not always make the firm worse off and consumers better off....