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A grey market or gray market also known as parallel market is the trade of a commodity through distribution channels which, while legal, are unofficial, unauthorized, or unintended by the original manufacturer. The term gray economy, however, refers to workers being paid under the table, without paying income taxes or contributing to such public services as Social Security and Medicare. It is sometimes referred to as the underground economy or "hidden economy." A black market is the trade of goods and services that are illegal in themselves and/or distributed through illegal channels, such as the selling of stolen goods, certain drugs or unregistered handguns. The two main types of grey market are imported manufactured goods that would normally be unavailable or more expensive in a certain country and unissued securities that are not yet traded in official markets. Sometimes the term dark market is used to describe secretive, unregulated (though often technically legal) trading in commodity futures, notably crude oil in 2008. This can be considered a third type of "grey market" since it is legal, yet unregulated, and probably not intended or explicitly authorized by oil producers Unlike black market goods, grey-market goods are legal. However, they are sold outside 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 electronic equipment such as cameras. Entrepreneurs buy the product where it is available cheaply, often at retail but sometimes at wholesale, and import it legally to the target market. They then sell it at a price high enough to provide a profit but under the normal market price. International efforts to promote free trade, including reduced tariffs and harmonized national standards, facilitate this form of arbitrage whenever manufacturers attempt to preserve highly disparate pricing. Because of the nature of grey markets, it is difficult or impossible to track the precise numbers of grey-market sales. Grey-market goods are often new, but some grey market goods are used goods. A market in used goods is sometimes nicknamed a Green Market. 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 otherwise infringing goods. Grey markets can sometimes develop for select video game consoles and titles whose demand temporarily outstrips supply and the local shops run out of stock, this happens especially during the holiday season. Other popular items, such as dolls can also be affected. In such situations the grey market price may be considerably higher than the manufacturer’s suggested retail price. Online auction sites such as eBay have contributed to the emergence of the video game grey market. Grey import vehicles are new or used motor vehicles and motorcycles legally imported from another country through channels other than the maker’s official distribution system. The synonymous term parallel import is sometimes substituted. Car makers and local distributors sometimes regard grey imports as a threat to their network of franchised dealerships, but independent distributors don’t mind since more cars of an odd brand bring in money from service and spare parts. Also, car makers frequently arbitrage markets, setting the price according to local market conditions so the same vehicle will have different real prices in different territories. In order for the arbitrage to work, there must be some means to reduce, eliminate, or reverse whatever savings could be achieved by purchasing the car in the lower priced territory. Examples of such barriers include regulations preventing import or requiring costly vehicle modifications. Grey import vehicles circumvent this profit maximization strategy. In some countries, such as Vietnam and Australia, the import of grey-market vehicles has largely been bannedOverview Grey imports are generally used vehicles, although some are new, particularly in Europe where the European Union tacitly approves grey imports from other EU countries. In 1998, the European Commission fined Volkswagen for attempting to prevent prospective buyers from Germany and Austria from going to Italy to buy new VWs at lower pre-tax prices; pre-tax price is lower in Italy, as in Denmark, due to higher tax on cars. It is even possible for car buyers in the United Kingdom to buy right-hand drive cars in EU countries with right-hand traffic where left-hand drive cars are the norm. Japanese used vehicle exporting is a large global business, as rigorous road tests and high depreciation make such vehicles worth very little after six years, and strict environmental laws make vehicle disposal expensive. Consequently, it is profitable to export them to other countries with left-hand traffic, such as New Zealand, the Republic of Ireland, the United Kingdom, Malta, South Africa, Kenya, Zambia, Mozambique, Bangladesh and Cyprus. Some have even been exported to countries such as Peru, Paraguay, Russia, and Burma, where they have proved popular with local buyers despite the fact that these countries drive on the right. In Peru and Paraguay, used cars imported from Japan are converted to left hand drive before being allowed on the roads, the cost of which is offset by the high taxes applied to new cars. There have also been exports of used cars from Singapore, where cars more than ten years old are scrapped or exported. As a result, thousands of these vehicles are exported every year, making Singapore the second largest exporter of used right-hand drive cars after Japan. Thailand is the third largest exporter of brand new and used right-hand drive cars after Japan and Singapore, because of that country’s high-volume production of diesel 4x4 vehicles such as the Toyota Hilux Vigo, Toyota Fortuner, Mitsubishi L300 Delica, Nissan Navara, Ford Ranger, Chevy Colorado, and others. The Toyota Vigo is the most exported vehicle by parallel exporters. Unlike Japanese and Singaporean exports, the majority of Thailand’s grey exports are of new vehicles and the market is dominated by two companies. Similarly, there are exports of left hand drive (LHD) used cars from Germany to countries in Eastern Europe, EU countries and LHD markets in West Africa. Some cars in the United States are sold only as export by insurance companies due to having been stolen and recovered or damaged in other ways. Broadcasting Main article: Pirate decryption
In television and radio broadcasting, grey markets primarily exist in relation to satellite radio and satellite television delivery. The most common form is companies reselling the equipment and services of a provider not licensed to operate in the market. For instance, a Canadian consumer who wants access to American television and radio services that are not available in Canada may approach a grey market reseller of Dish Network or DirecTV. There is also a grey market in the United States for Canadian satellite services such as Bell TV or Shaw Direct. In Europe some satellite TV services are encrypted for rights reasons, as they are only entitled to broadcast films, sporting events and US entertainment programming in a certain country or countries, hence only residents of the UK and Ireland may subscribe to Sky Digital. In other European countries with large British expatriate populations, such as Spain, Sky is widely available. Although Sky does not condone the use of its viewing cards outside the UK or Ireland, and has the technology to render them invalid, many people continue to use them. Illegitimate importing of "free-to-view" Sky cards from the UK to Ireland is often done so that Irish Sky customers can receive Five and some of the other channels not generally available via Sky in the Republic due to rights issues. Irish Sky viewing cards, which allow viewing of Irish terrestrial channels, are imported into the UK. Northern Ireland residents subscribing to Sky can watch RTÉ One and Two and TG4, although not TV3, which carries many of the same programmes as ITV, a lot of the programmes airing before ITV can show them. It is also becoming increasingly common in the UK for some pubs to use satellite decoder cards from Greece, Norway, Malaysia or the Arab world to receive satellite TV broadcasting live English football matches from those countries. Alternatively, they may use cards which allow pirate decryption of scrambled signals. Such cards are typically much cheaper than the cards available in the UK from Sky (who charge extra fees for public showing licenses). However, Sky has taken civil and criminal action against some who do this. Two recent cases involving grey cards have been referred to the European Court of Justice. From Wikipedia, the free encyclopedia : Trade in used goods market |
