Why is The Economist more expensive in New Zealand?
The simple answer is price discrimination. If readers in New Zealand are willing to pay more for subscriptions to The Economist than are readers in Canada, then prices will vary across markets – unless there is a way for consumers in the cheaper market to on-sell to those in the pricier markets, or for those in the expensive markets to pretend to be in the cheaper market.
Fortunately, you can parallel import The Economist simply by providing a Canadian billing address.
Price discrimination does not work when consumers in the higher cost market can easily access the lower cost market. New Zealand’s parallel importation regime helps to break international price discrimination that too often works to the detriment of Kiwi consumers.
I have not seen any study on it. But I would be willing to bet that New Zealand’s parallel importation regime has done more to help Kiwi consumers than has anything that the Commerce Commission has ever done. It is very likely our most effective competition-enhancing institution.
That was me reprising parallel importation and price discrimination in last week’s print edition of the National Business Review. Subscribe!