Question

Which of the following is true of parallel imports?

A) The possibility of a parallel market occurs whenever price differences are lesser than the cost of transportation between two markets.
B) As the prices for the same good are equal in different markets, the volume of parallel imports will increase.
C) Restrictions like import quotas and high tariffs can help reduce parallel imports.
D) Parallel imports can do long-term damage in the market for trademarked products.
E) Parallel imports arise from the differences in the quality of trademarked goods.

Answer 1

The correct answer to the question about parallel imports is that restrictions such as import quotas and high tariffs can help reduce the volume of parallel imports by raising the costs associated with importing goods.

Step-by-step explanation:

The question asks about the nature of parallel imports, which occur when products are brought into a country from another market without the permission of the intellectual property owner. These imports typically arise when there is a significant price difference for the same product in two markets. The correct answer among the options given is C) Restrictions like import quotas and high tariffs can help reduce parallel imports. This is because such measures make it less economically viable for parallel importers to operate, by raising the costs of importing goods into a country.

Options A, B, and E are incorrect because parallel imports generally occur when there are significant price differences, not when prices are equal, and they are not necessarily dependent on the quality differences of trademarked goods. Option D is incorrect because it speaks to long-term damage, which is a subjective interpretation and not an inherent quality of parallel imports.