Grey market

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The grey market (or gray market) refers to the flow of new goods through distribution channels other than those authorized or intended by the manufacturer or producer. Used or pre-owned goods are just that: used. Only new products fall under the legal, accepted definition of grey market.

Unlike those on the black market, grey market goods are not illegal. Instead, they are being sold outside of normal distribution channels by companies which may have no relationship with the producer of the goods. Frequently this form of parallel import occurs when the price of an item is significantly higher in one country than another. This situation commonly occurs with cigarettes and electronic equipment such as cameras. Entrepreneurs buy the product where it is available cheaply, often at retail but sometimes at wholesale, import it legally to the target market and sell it at a price which provides a profit but which is below the normal market price there.

The grey market is an example of the economic practice called arbitrage.

Importing certain legally restricted items such as prescription drugs or firearms would be categorized as black market, as would smuggling the goods into the target country to avoid import duties. A related concept is bootlegging, the smuggling or transport of highly regulated goods, especially alcoholic beverages. The term "bootlegging" is also often applied to the production or distribution of counterfeit or pirated goods.

Because of the nature of grey markets, it is difficult or impossible to track the precise numbers of grey market sales.

On securities markets, grey market has a different meaning. It refers to the buying and selling of securities to be issued in the future and, therefore not yet circulating. This typically occurs some days before an auction of government bonds or bills and that trading is subject to the effective issue of those securities. Sometimes this is taken as a forecast of the prices that markets expect for future issues.


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The dangers and implications of this issue are real. Many people question or wonder how this will be controlled, minimized or tackled.

The intention of this page is to concentrate the arguments and ideas within this wiki—implying that those comments (now sprinkled throught the wiki will probably be moved here. For the moment, links where it is mentioned will be wikified. Please give us a hand!

Incentives

A strategy to avoid children (and their families) from 'cashing the gift' is to make it sufficiently worthwhile in 'keeping the gift'.

Refurbished PCs

A program that distributed cheap refurbished PCs or refurbished PC parts could help to lower the relative value of an XO laptop in the grey market. Additionally one could subsidize a limited number of new XO laptops per country to lower the perceived purchase cost of a new machine.

See also

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