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Income based price subsidies and parallel imports

Acharyya, Rajat, Garcia-Alonso, Maria D C (2012) Income based price subsidies and parallel imports. International Review of Economics and Finance, 22 (1). pp. 25-41. ISSN 1059-0560. (doi:10.1016/j.iref.2011.08.001) (KAR id:40508)


We present a policy game where a Rich country has a higher ability than a Poor country to commit to certain elements of health policy such as providing income related price subsidies and allowing parallel imports (PI). When allowing PI is not a choice for the Poor country, the Rich country allows PI and both countries provide a subsidy to their poorer buyers as the subgame perfect equilibrium policies. However, when the Poor is able to PI a different equilibrium may arise. We show that the ability of the Poor to allow PI might increase welfare in this country even if it is never implemented. We also prove that as the Poor country gets richer, it will not be in their best interest to sign an agreement with the Rich to commit to not allowing PI.

Item Type: Article
DOI/Identification number: 10.1016/j.iref.2011.08.001
Additional information: number of additional authors: 1;
Uncontrolled keywords: Income based price subsidies; Parallel imports; Pharmaceuticals
Subjects: H Social Sciences > HB Economic Theory
H Social Sciences > HC Economic History and Conditions
Divisions: Divisions > Division of Human and Social Sciences > School of Economics
Depositing User: Maria Garcia-Alonso
Date Deposited: 07 Mar 2014 00:05 UTC
Last Modified: 16 Nov 2021 10:15 UTC
Resource URI: (The current URI for this page, for reference purposes)

University of Kent Author Information

Garcia-Alonso, Maria D C.

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