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We study the dependence of incentives for product innovation on the presence, or absence, of parallel trade. The common … assertion is that the presence of parallel trade lowers the incentive for product innovation. Our results support this assertion …
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This paper investigates how network externalities affect parallel imports and profits. In a three-country model, a multinational manufacturer produces locally and sells through local distributors in two countries. Parallel imports between two countries are permitted by the manufacturer. The...
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-post welfare properties but leads to lower investment ex ante. Conversely, when differential pricing is cost-based, uniform pricing … has bad ex-post welfare properties but leads to higher investment ex ante …
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effect of the investment decision on transport costs biases empirical results. The empirical estimations rely on newly … the endogeneity of the investment decision. Our results confirm that transport prices are influenced by both the distance …
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