Effects of Parallel Importation and Power Structures on Price Competition in Duopolistic Supply Chains

Multinational manufacturers (MNMs) achieve significant gains from product quality and reputation in entering emerging markets while facing many operational risks, such as parallel importation (PI) and market power structures. This paper focuses on a duopolistic supply chain consisting of one MNM and one local manufacturer (LM) in an emerging market with low willingness-to-pay (WTP). Within the game analytical framework, we consider different market power structures and investigate the impact of PI on the manufacturers’ price competition, and we further discuss the MNM’s countermeasures in high and low WTP markets. We find that PI does not occur when the WTP ratio is below the threshold or the transaction cost is high. Power structures significantly affect the participant’s profitability, the LM’s gains are maximized if the MNM fully dominates the market, and the MNM loses the minimum if the LM exclusively rules the market. When in codominant structure, the parallel importer achieves maximum gains while the MNM’s profits rise in the market WTP ratio interval. PI activities boost the benefits for the LM and the parallel importer, whereas increasing transaction costs diminish those effects and promote the MNM’s profitability. PI promotes or deters price competition in duopolistic supply chains depending on power structures. In addition, increasing either the level of product substitution or quality perception restrains PI and improves the LM’s earnings, but the latter expands the MNM’s losses.

Parallel importation as a policy option to reduce price of patented health technologies

The COVID-19 pandemic has burdened most of the health systems around the world. Governments, especially in resource-constrained low- and middle-income countries, are finding it hard to meet the health needs of their nationals. Patent exclusive rights further add to the cost of healthcare by allowing supra-competitive prices of protected technologies. Parallel importation of patented health technologies is a legitimate policy option to obtain patented health technologies at a reduced price. This paper examines the legality and practical significance of parallel trade of patented medicines as a price-reducing policy option and evaluates some of the practical hurdles in the actual use of this important public health flexibility. This study supports the adoption of international exhaustion of patent rights as a mandatory rule for the international trading system.

The Exclusive Rights of Licensees in Parallel Import Practices

Parallel imports are one of the most interesting and unique phenomena of international trade. On one hand, it applies competition law, while on the other, trademark law and the customs law also apply in this activity. Parallel imports occur when genuine goods are imported in parallel (concurrently) to goods imported by a licensee. These parallel imports are then sold at a cheaper price than that of the goods of the licensee. This parallel import activity is inconsistent with the exclusive rights that the licensee receives under the licensing agreement it makes with the owner of the trademark. This exclusive right is essentially monopolistic, entitling the licensee to prevent all parties with the commercial intention of selling the same or similar goods as their own. However, the right to monopoly is limited for the sake of a fair competition. The licensee can sue to get compensation in parallel importation base on unjust enrichment principle. Moreover, parallel importation can be inhabited by enforcing procedural and administration regarding import of goods such as, Indonesian national standard and label in bahasa

Economic and Social Effects of Parallel Importation of Pharmaceutical Products on Organisational Performance in Pharmaceutical Firms in Kenya

The purpose of this paper is to analyse the effect of parallel importation of pharmaceutical products on the organisational performance of pharmaceutical firms in Kenya. The paper is guided by research objectives that are focused on: the economic effects of parallel importation of pharmaceutical products on organisational performance and the social effects of parallel importation of pharmaceutical products on organisational performance. This paper concludes that the issue of economic and social effects of parallel importation and how they affect the organizational performance of pharmaceutical companies in Kenya is rich for exploration and recommends that a study be conducted focusing on parallel importation and organizational performance of pharmaceutical companies; especially now that a clear legal framework on parallel importation has been put in place.

16. Trade Marks and the Free Movement Aspects of EU Law

This chapter examines the interaction between trade mark law and the principles of free movement of goods in the EU. It discusses the concepts of essential function and specific subject matter which the CJEU uses to distinguish between what amounts to pro-competitive use of the trade mark, which the Treaty encourages, and anti-competitive abuse of the trade mark rights, which the Treaty prohibits. The essential function looks at this from a theoretical perspective, whilst the specific subject matter translates this in more practical guidelines. The chapter then turns cases and heated debates arising from parallel importation, which essentially focus on the relabelling and repackaging of parallel-traded goods.