Question

1. A monopolistic producer uses a dealer network, in which it limits the number of dealers and restricts them to exclusive territories, to sells its product in another country. Some importers buy the product in the other country and sell it in the United States. Such imported products are said to be sold on the gray market. Explain why the manufacturer might not act to prevent such gray market sales. Welcome to use graphical if you wish for this question to prove your argument.

Answer 1

The grey market is the arrangement of unapproved and informal deals channels for products. Grey market items might be more affordable than those purchased through authority dispersion channels yet are at times, inferior. Under the present framework, a monopolistic maker cannot build his market base officially. However, on account of the importers that purchase its items in different nations and sell them in the United States, the monopolistic maker can grow his market base through the grey market. Regardless of whether the cost at which the merchandise is sold in the grey market is low, the monopolist can, in any case, make benefits since he does not settle government expenses on the products sold.