Existence of gray markets lead to which of the following outcomes?
A) They create a free-rider problem making legitimate distributors' investments in supporting a manufacturer's product less productive.
B) They make the distribution channel stronger.
C) Goods sold in grey markets are always counterfeit.
D) Goods sold in grey markets come with standard product warranties.
E) Taxes imposed on grey market products are very high.

Question

Quizplus · Accepted Answer

Gray markets often sell products at cheaper prices compared to authorized distributors, attracting customers who want to save money. This leads to a free-rider problem where legitimate distributors' investments in supporting a manufacturer's product become less productive as their customers are lured to buy from cheaper gray markets.

Existence of Gray Markets Lead to Which of the Following