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Business Economics

, Volume 49, Issue 4, pp 263–270 | Cite as

Confronting the Gray Market Problem

  • Peggy E Chaudhry
Original Article

Abstract

Gray markets involve the sales of legitimate products by way of channels of distribution that are not authorized by the brand owners. Gray markets may benefit consumers and even brand owners under certain circumstances. On balance, however, gray markets are detrimental to brand owners because gray market traders access genuine product in both physical and virtual markets and reap profits stemming from the resale of goods owing to price differentiation between markets, thus depriving brand owners of those profits. In this study, we discuss the principal factors that encourage a gray market and the legal underpinnings that permit gray markets in the United States. We then summarize managerial tactics—both reactive and proactive—to combat gray markets.

Keywords

gray market parallel trade trade diversion 

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Copyright information

© National Association for Business Economics 2014

Authors and Affiliations

  • Peggy E Chaudhry

There are no affiliations available

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