What Does the Term “Grey Market” Mean and What Is the Difference Between the Black Market and Grey Market?

“Grey market” goods are legally sold through channels other than those authorized by the manufacturer.

Unlike black market products, which may be counterfeits, grey market goods are the real thing.

Entrepreneurs simply buy a product in one country where the item is significantly cheaper than another, then import it to the target market and legally sell the merchandise at a higher price.

This situation commonly occurs with cigarettes and electronics, though importing legally restricted items leaves the “grey” and enters the “black” market.

By avoiding the normal distribution fees or licenses, consumers usually share in the profits of grey marketers through lower prices but are likely to discover that products acquired this way aren’t supported or warranted by the manufacturer.

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

Grey market has a different meaning on securities markets where the term refers to the buying and selling of securities to be issued in the future and, therefore, not yet circulating.

About Karen Hill

Karen Hill is a freelance writer, editor, and columnist. Born in New York, her work has appeared in the Examiner, Yahoo News, Buzzfeed, among others.

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