1. Learn more about this phenomenon. Who receives value in such transactions? Who loses value?
2. How are manufacturers dealing with this problem?

Parallel imports, gray products, and price diversion all represent the same activity—diverting imported products meant for one market at lower prices and reselling them at higher profits in other markets. This happens in many industries, including pharmaceuticals, apparel, high-tech electronics, auto parts, luxury goods, cosmetics, and tobacco. The textbook you’re using now might be a gray product if it was intended for an international market but you purchased it from Amazon.com for much less than what you’d pay at your bookstore or the publisher’s Web site. And the designer sweater you bought at Marshalls or TJ Maxx most likely got into those stores through gray market trading. Although U.S. federal law prohibits importing prescription drugs from abroad, the same is not true in other countries. For example, gray traders purchase pharmaceutical drugs in poorer countries, such as Greece and Spain, and resell them in the United Kingdom or Sweden, where higher prices garner profits for the traders. In fact, parallel importing of most products is legal, and some experts claim that it’s just the free market working. In some cases, though, counterfeit goods are mixed in with the legitimate brands.