Spending and Pricing to Deter Arbitrage

• 成果类型: Article
• 署名作者: Salant, Stephen W.
• 署名单位: University of Michigan System; University of Michigan
• 刊物名称: ECONOMIC JOURNAL
• ISSN/ISSBN: 0013-0133
• DOI: 10.1093/ej/ueae023
• 发表日期: 2024
• 页码: 2638-2654
• 关键词: Parallel imports; Divisionalization

摘要

This article presents examples of arbitrage deterrence from the pharmaceutical, chemical and auto industries. Based on these cases, it develops two models where a monopolist prices and spends to deter arbitrage. The models differ in whether the lower price is set by the firm or negotiated with a representative of consumers. In both models, imports into the high-price market are completely deterred, but the two markets are nonetheless linked by the threat of arbitrage. If this linkage is ignored and the absence of arbitrage is misattributed to exogenous factors, econometric estimates of firm bargaining power will be biased upwards.