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Cross-border Travellers and Parallel Trade: Implications for Asian Economies

journal contribution
posted on 2017-08-01, 00:00 authored by Xuan NguyenXuan Nguyen, Chi-Chur Chao, Pasquale SgroPasquale Sgro, Munirul NabinMunirul Nabin
This paper explores the impact of parallel trade in an export market by cross-border travellers on welfare of the home country in a model with heterogeneous consumers' perceptions. We show that such parallel trade when it is organised trading always hurts the home-country welfare. However, when parallel trade is unorganised trading, it might benefit the home-country welfare provided that the size of the export market is relatively small. Along these lines, we suggest optimal policy responses in the home country to parallel trade by cross-border travellers. The results of the paper yield insightful policy implications for Asian economies.

History

Journal

The world economy

Volume

40

Issue

8

Season

Special issue: Asia

Pagination

1531 - 1546

Publisher

Wiley

Location

London, Eng.

ISSN

0378-5920

eISSN

1467-9701

Language

eng

Publication classification

C Journal article; C1 Refereed article in a scholarly journal

Copyright notice

2016, Wiley