Final answer:
Parallel imports are most lucrative when exploiting price differences between countries due to taxes and tariffs. Economies of scale allow for economic gains in countries both importing and exporting the same goods by fostering competition and innovation.
Step-by-step explanation:
In which situation are parallel imports most lucrative? Parallel imports are most lucrative in situations where there are significant price discrepancies between countries for the same product due to factors such as taxes, tariffs, and currencies. A product manufactured in one country and sold in another without the permission of the trademark owner can benefit from these price differences, as importers seek to purchase the product where it is cheaper and sell it where the prices are higher, capturing the difference as profit. However, these activities often lead to conflicts with intellectual property rights and may be regulated or restricted in certain jurisdictions.
The economies of scale and international trade provide an economic gain for a country from both importing and exporting the same good, like cars, by combining lower average production costs with competition and variety for consumers. Intra-industry trade allows large automobile factories in different countries to make and sell their products around the world, bringing innovation and responsiveness to what consumers want. This is particularly true in high-income economies where about half of world trade involves shipping goods between similar countries. America's car producers, for example, have improved their products significantly due to competitive pressure from East Asian and European carmakers, which translates into dynamic comparative advantage.