Gray Market Research Articles

Exploring the digital gray zone of online medicinal markets emerging from search

AbstractThis explorative study investigates the emergence of gray zone markets from search engines amidst the global expansion of online markets. With the analytical approach of infrastructural inversion, we examine how the search infrastructure constructs access to a gray zone market including both authorized online pharmacies and unauthorized vendors. Using Sweden and Google Search as a case, we explore the online presence of three products (vitamin D, paracetamol, and Viagra), through search engine result page analysis, web crawling, and network analysis. Infrastructural inversion unveils the typically invisible mechanisms of search engines, considering user queries, algorithmic priorities, SEO practices, and pharmacy regulations. We find gray zones only emerge in searches for erectile disfunction medicinal products and information, where unauthorized vendors successfully competed for visibility in search engine rankings. A complex web of conditions can steer consumers toward gray zone markets, complicating the access to safe and regulated medicinal products. This can expose individuals to risks associated with unverified medicinal products, but also challenges the integrity of the online health information infrastructure.

Updated Risk Assessment of Cannabidiol in Foods Based on Benchmark Dose–Response Modeling

Cannabidiol (CBD), a non-psychotropic main component of the Cannabis plant, has been approved as a drug in the European Union (EU) under the name “Epidyolex”. However, its approval process as a food ingredient under the Novel Food Regulation was paused by the European Food Safety Authority (EFSA) due to a lack of safety data. Nevertheless, there is a growing, unregulated market in which CBD is advertised with various health claims and dosage instructions. Of particular concern is its toxic effect on the liver and possible reproductive toxicity in humans. Studies suitable for calculating the benchmark dose were identified from the available data. Animal studies yielded a benchmark dose lower confidence limit (BMDL) of 43 mg/kg bw/day, which translates into a safe human dose of approximately 15 mg/day. Only the Lowest-Observed-Adverse-Effect Level (LOAEL) of 4.3 mg/kg bw/day could be identified from the human data. This updated risk assessment confirmed a health-based guidance value (HBGV) of 10 mg/day based on human LOAEL. Despite the existing data gaps, preliminary regulation appears advisable because the current form of the gray CBD market is unacceptable from the standpoint of consumer safety and protection.

Blockchain-enabled downward traceability to combat gray market

Cross-market brand owners have long been troubled by the gray market issues. This study examines a dual distribution channel model involving one brand owner, two retailers, and two independent markets. In this model, low-end retailers privately transfer products from the low-end to high-end markets, creating a gray market. The brand addresses this behavior by adopting blockchain. We examine the impact of blockchain on gray market invasion, firm decisions, consumer surplus, and social welfare through downward traceability. The results show that gray market invasion consistently benefits low-end market retailers while disadvantaging high-end market retailers. It is profitable for the brand to allow gray market invasion when the willingness to pay in the low-end market is substantial. Blockchain adoption can effectively inhibit gray market invasion, benefiting high-end market retailers while harming low-end market retailers and the brand, depending on the cost and penalty fee involved with blockchain implementation. When the cost of blockchain adoption is relatively low, brand adopting blockchain may achieve a win-win-win market situation. However, although consumer surplus and social welfare can benefit from a gray market invasion, adopting blockchain reduces this impact, especially when cost of blockchain adoption and penalty fee are both relatively high.

The interaction between manufacturer encroachment and gray market

With the rapid development of retail platforms, many manufacturers use retail platforms to encroach into the retail market (i.e., a type manufacturer encroachment) and gray market is increasingly prevalent in various industries. This paper considers a manufacturer who directly sells product 1 in the domestic market and sells product 2 through an incumbent retailer in the overseas market and a gray marketer can divert product 1 across markets without authorized (we call it gray market). In this paper, we examine the interaction between manufacturer encroachment and gray market. We find that when the domestic price of product 1 is sufficiently low, the gray marketer can successfully enter the overseas market without and with encroachment. Second, regardless of whether there is a gray market threat, the manufacturer has an incentive to encroach through retail platform when the commission rate is low. Moreover, the manufacturer’s incentive to encroach varies with the domestic price of product 1 and gray market threat. Finally, manufacturer encroachment can reduce the scale of the gray market and even eliminate the gray market under certain conditions. The gray marketer always suffers from manufacturer encroachment while the retailer can benefit from manufacturer encroachment.

The Cannabis Gray Market: A Case for Cannabis Regulatory Science Research

The Cannabis Gray Market: A Case for Cannabis Regulatory Science Research

Isolation and characterization of synthesis intermediates and side products in hexahydrocannabiphorol

AbstractAfter the Swiss ban of hexahydrocannabinol (HHC) in March 2023, other semisynthetic dibenzopyran cannabinoids emerged on the Swiss gray market. Hexahydrocannabiphorol (HHCP) was the most prominent of them due to its potent cannabimimetic effects, as anecdotal reports from recreational users suggest. In October 2023, a class wide ban of dibenzopyran cannabinoids was introduced in Switzerland to prevent new similar substances from entering the drug market. Various vendors in online shops claim that HHCP is made from CBD, even though they possess different alkyl chain lengths. An HHCP sample was analyzed by gas chromatography coupled to mass spectrometry (GC‐MS), showing that a mixture of molecules with the same or a similar molecular mass as HHCP was present. Six different substances could be isolated from this sample using column chromatography. Four phenols ((9R)‐HHCP, iso‐HHCP, cis‐HHCP, and abn‐HHCP) and two ketones (possible intermediates to (9R)‐HHCP and abn‐HHCP) were identified by various nuclear magnetic resonance spectroscopy (NMR) techniques. (9S)‐HHCP was obtained in an impure fraction. In addition, a fraction was obtained that showed characteristic molecular and fragment ions consistent with bisalkylated products from the synthesis of similar compounds. The presence of abnormal cannabinoids (abn‐HHCP) and bisalkylated cannabinoids is a confirmation that this sample was produced purely synthetically as initially suspected, as these compounds have not been reported in Cannabis. Chiral derivatization of the phenols with Mosher acid chlorides showed that only iso‐HHCP was present as a scalemic mixture, indicating a good stereocontrol of this synthetic procedure.

The plurality of norms that factor into Canadians’ decisions to engage in transnational egg transactions

Egg donation is regulated differently in countries around the world. In Canada, federal law – the Assisted Human Reproduction Act – prohibits paying egg providers. As a result, many Canadians are engaging in a grey market for eggs or are pursuing transnational egg transactions by traveling to countries with more permissive laws, or having eggs shipped to Canada. In this paper I rely on interview data with 18 Canadian intended parents and 16 Canadian egg providers – many of whom had traveled abroad for egg transactions – to understand how intended parents and egg providers decide how they will pursue egg transactions; specifically, why so many Canadians choose to engage in transnational egg transactions. I use Brian Z. Tamanaha’s theory of systems of normative ordering, combined with Paul Schiff Berman’s cosmopolitan pluralism, as a framework to reveal the plurality of norms and other factors that weigh into this decision-making and that help reveal the answer to the “why.” Ultimately, I illustrate how intended parents and egg providers are impacted by sometimes clashing norms from official legal systems, economic/capitalist systems, and customary/cultural systems. These norms, along with moral and practical concerns, shape the decisions of intended parents and egg providers.

Ghost Scrolls—Rumoured and Longed-for Dead Sea Scrolls

ABSTRACT There are myriads of bank boxes and vaults in the world and judging by some of the stories under scrutiny in this article, many of them contain Dead Sea Scrolls. The article analyses tales linked to three so-called ghost scrolls whilst focussing on contemporary manuscript tales as a phenomenon: What characterises such stories? How are they developed, kept alive, and passed down? What are their functions? I will argue that these tales serve as adaptable templates for market players and bring colour and glamor to the grey market. The ghost scroll is not so much a container of text as a placeholder for hype, dreams and longing. It influences contemporary academic imaginations, expectations, desires and affects scholars’ interpretational frames.

ADULTERATION IN FOOD INDUSTRY IN 2023 - OVERVIEW

This review focuses on food fraud and shows a picture of the most critical notifications reported by the Knowledge Centre for Food Fraud and Quality worldwide during the year 2023. Knowledge4Policy (K4P) is the EU Commission's platform for evidence-based policymaking. This study aims to provide an overview of the cases of food fraud focused on specific food groups - (fish and seafood, oils and fats, fruit and vegetables, honey and sugar, meat and meat products, wine, alcohol, milk and dairy products, spices and herbs, grain-based food – cereals - bakery products, eggs, snacks, coffee, tea, cocoa, non-alcoholic beverages, dietic foods supplements, fortified food). The data on food fraud was divided based on world continents (Asia, Africa, South America, North- Central America, Australia, and Europe). The next part of our overview shows the count of food fraud incidents separately each month for 2023. Overall, 419 cases were registered worldwide in 66 countries in 2023. Most cases were registered in Europe, South America, Africa, North-Central America, and Australia. Based on our findings, we can conclude that the highest number of cases were registered in Pakistan, followed by Italy, Brazil, Nigeria, the Dominican Republic, and Australia. The most abundant was alcohol-beverages adulteration (18.13 % of the total number of cases reported in 2023 worldwide), followed by meat and meat products (15.03 %), fish and seafood (13.60 %), and grain-based food, cereals, and bakery products (11.69 %). Analysis of notification data showed that the most used type of fraud was grey market trading, mislabeling, document forgery, dilution/mixing, substitution, and unapproved enhancement. Food fraud databases serve as valuable tools for the food industry and regulatory bodies, aiding in mitigating food fraud risks.

An Empirical Study on Influence of Grey Market Premium and listing gains on Investment in Initial Public Offering

An Empirical Study on Influence of Grey Market Premium and listing gains on Investment in Initial Public Offering

Profitable gray market with asymmetric costs

ABSTRACT When manufacturers sell their branded goods at different prices in different markets or channels, gray marketers buy goods in the low-priced market and resell them in the high-priced market to compete with the manufacturers’ authorized sellers. Conventional wisdom suggests the lost sales in the high-priced market resulting from the gray market’s diversion always make manufacturers worse off. However, by purely considering the marginal production cost in the high-priced market is higher than the low-priced market, we show that the manufacturer can gain from gray markets, which contradicts to the conventional result. It happens when the production is significantly less efficient in the high-priced market than in the low-priced market.

Deterring the Gray Market: Product Diversion Detection via Learning Disentangled Representations of Multivariate Time Series

A gray market emerges when some distributors divert products to unauthorized distributors/retailers to make sneaky profits from the manufacturers’ differential channel incentives, such as quantity discounts. Traditionally, manufacturers rely heavily on internal audits to periodically investigate the flows of products and funds so as to deter the gray market; however, this is too costly given the large number of distributors and their huge volumes of orders. Owing to the advances in data analytics techniques, the ordering quantities of a distributor over time, which form multivariate time series, can help reveal suspicious product diversion behaviors and narrow the audit scope drastically. To that end, in this paper, we build on the recent advancement of representation learning for time series and adopt a sequence autoencoder to automatically characterize the overall demand patterns. To cope with the underlying entangled factors and interfering information in the multivariate time series of ordering quantities, we develop a disentangled learning scheme to construct more effective sequence representations. An interdistributor correlation regularization is also proposed to ensure more reliable representations. Finally, given the highly scarce anomaly labels for the detection task, an unsupervised deep generative model based on the learned representations of the distributors is developed to estimate the densities of distributions, which enables the anomaly scores generated through end-to-end learning. Extensive experiments on a real-world distribution channel data set and a larger simulated data set empirically validate our model’s superior and robust performances compared with several state-of-the-art baselines. Additionally, our illustrative economic analysis demonstrates that the manufacturers can launch more targeted and cost-effective audits toward the suspected distributors recommended by our model so as to deter the gray market. History: Accepted by Ram Ramesh, Area Editor for Data Science & Machine Learning. Funding: This work was supported by the National Natural Science Foundation of China [Grants 72031001, 72301017, 72371011, and 72242101]. Supplemental Material: The software that supports the findings of this study is available within the paper and its Supplemental Information ( https://pubsonline.informs.org/doi/suppl/10.1287/ijoc.2022.0155 ) as well as from the IJOC GitHub software repository ( https://github.com/INFORMSJoC/2022.0155 ). The complete IJOC Software and Data Repository is available at https://informsjoc.github.io/ .

When Gray Markets Meet “Made in China”: The Impacts of Global Markets and Value-Added Tax Refund

Motivated by the trend that a gray market such as overseas shopping is thriving on E-commerce platforms, this paper investigates the impacts of the gray market on global supply chain management. We consider a multinational firm (MNF) that outsources product manufacturing to a contract manufacturer (CM) in China and sells products in both the China market and overseas market. Owing to the price gap between the two markets, gray firms may purchase products in the low-price market and compete with the MNF in the high-price market. We build MNF-led Stackelberg game models under the two cases where the wholesale price between the CM and MNF is exogenously given or endogenously set by the CM. We also consider the impacts of China’s partial value-added tax (VAT) refund policy and consumers’ valuation discount for gray products. Our analysis shows that the gray market emerges if the two markets are highly asymmetric in size. Moreover, the gray market is more likely to emerge with lower values of valuation discount, substitutability, and VAT loss. We find that both the MNF and CM may be better off with the emergence of the gray market. When the gray market does not emerge but poses a threat, the MNF strategically adjusts her global pricing strategy to prevent the gray market. In this case, the threat of the gray market always hurts the MNF and CM under exogenous wholesale price, but may improve the MNF’s profit under endogenous wholesale price, since the CM is motivated to lower wholesale price to restore demand.

The challenges of supply side obsolescence: Obsolescence procurement's past, present, and future

AbstractObsolescence of critical manufacturing inputs is a major supply chain risk and represents a growing problem for procurement professionals that must be handled appropriately to profitably meet customers' needs. Supply side obsolescence occurs when suppliers end production of components and has been defined as “the loss or impending loss of original manufacturers of items or suppliers of items or raw materials.” Supply side obsolescence may radically increase costs to an organization, including high inventory holding costs, paying high prices for components on the gray market, and lost sales or lost market share due to an inability to complete products. This research utilized a grounded theory approach and discovered: (1) the risks of supply side obsolescence, (2) the impacts of supply side obsolescence on focal firms, and (3) how leading firms utilize obsolescence procurement teams to combat this potentially disastrous problem. Of specific interest to managers, obsolescence procurement teams are identified as formal teams that focus on dealing with obsolescence proactively and work to prevent the negative effects of supply side obsolescence. Finally, the study provides propositions to guide future research and concludes with suggestions for managers regarding mitigating supply side obsolescence, which will only become more urgent as the rate of technological change continues to increase.

The impact of gray marketing on the consumer purchasing decision-making process / an exploratory study of the opinions of a sample of customers of perfume shops in the city of Mosul

The impact of gray marketing on the consumer purchasing decision-making process / an exploratory study of the opinions of a sample of customers of perfume shops in the city of Mosul

IPO subscription dynamics: A comprehensive inquiry into the Indian stock market

The Indian IPO market showcased resilience during the global stock market downturn in 2022, emerging as a notable bright spot in regions such as Europe, the Middle East, India, and Africa. As the bullish rally of 2022 persists, Indian stock markets remain enticing for foreign institutional investors in 2023. A resurgence in IPO activity is anticipated, driven by increasing momentum and larger deals that are poised to overcome the constraints of subdued global sentiments and liquidity pressures, addressing the challenges posed by these factors. The study offers insights into factors influencing IPO subscriptions, capitalizing on the context of heightened stock market volatility and optimistic trends in the Indian stock market. A total of 132 IPOs listed on the Indian stock market between April 2019 and March 2023 were analyzed in this study. Multiple Linear Regression was used to assess the strength of the association between several factors outlined in the literature, and the overall subscription. Among the ten variables investigated in the study, it was observed that three variables under the external factors, specifically Grey Market Premium, IPO Rating, and Broker Recommendations, exerted a significant influence on the overall subscription. While other factors such as allocation proportion and issue attributes, were found to have no discernible influence on the overall subscription. The results indicate that the Indian IPO market demonstrates a prevalence of speculative behavior and a stronger reliance on expert recommendations, rather than being primarily driven by IPO characteristics. Acknowledgment Authors acknowledge that the publication fee is funded by Kingdom University, Bahrain.

The impacts of gray products and counterfeits in the luxury industry

With the rapid development of e-commerce, both gray products and counterfeit products are particularly serious in the luxury industry. This paper develops an analytical framework to investigate the interaction among the gray market, the counterfeit market and the authorised market, and examines how luxury manufacturers should manage unfair competition from gray products and/or counterfeit products. First, regardless of the existence of counterfeit products, the manufacturer can benefit from gray products when the status utility is moderate. Second, counterfeit products may benefit the manufacturer, depending on the availability of gray products and the physical resemblance of counterfeit products. Third, gray product may benefit the counterfeiter while counterfeit product always harms the gray marketer. Finally, we reveal that gray products can help luxury manufacturers fight against counterfeit products. In particular, gray products can reduce the demand for counterfeit products and even drive counterfeit products out of the market when the physical resemblance of counterfeit products is sufficiently low. Our findings provide several new managerial insights for luxury manufacturers and gray marketers.

Code and Data Repository for Deterring the Gray Market: Product Diversion Detection via Learning Disentangled Representations of Multivariate Time Series

Code and Data Repository for Deterring the Gray Market: Product Diversion Detection via Learning Disentangled Representations of Multivariate Time Series

Migrant workers in European informal health care settings

Abstract Care for the elderly in Europe increasingly depends on migrant carers, both in institutionalised and informal care settings. For the latter, the vulnerability of migrant carers working in private households has been described in several studies. Austria is a EU member state that made attempts to legalise the grey labour market of home care by several legislative changes, providing a framework of regulations to foster inclusion of migrant care workers into schemes of social protection. It can serve as an example how attempts of inclusion also make room for in-built mechanisms of exclusion, and how public health issues are related to economic considerations of a “care market”, with migrant workers as important, yet rather voiceless, stakeholders.

Impacts of gray market selling on the supply chain under product upgrade and pricing flexibility decisions

AbstractGray markets are infamous for unauthorized diversion of authentic products at lower prices to harm the manufacturer's authorized distribution channel. Hence, manufacturers are becoming more proactive in shaping strategies that can counter gray markets. By considering the risk of unauthorized selling through gray markets, we analyze the manufacturer's strategic channel choice and product upgrade decision. We analytically explore the provision of granting flexibility to the legitimate retailer to adjust price during the selling season as a strategy to cope with gray market. We find that unauthorized selling through gray markets has a severe negative impact on the manufacturer's profitability depending on the degree of channel differentiation and product brand equity. We counter‐intuitively reveal that the overall decentralized supply chain can be better‐off, owing to higher product leakage, especially because the legitimate retailer gains an increased sales volume through product diversion to the gray market. However, the manufacturer's loss is more severe in such a decentralized supply chain. We show that the manufacturer can eliminate unauthorized sales through gray market by offering price adjustment flexibility to the retailer. Another compelling finding exhibits that the manufacturer's decision to launch an upgraded product can intensify the diversion of an existing product. However, unfair competition from the unauthorized channel cannibalizes the sales of an upgraded product, thereby making the manufacturer worse‐off. Interestingly, despite the cannibalization of upgraded product sales, the manufacturer can be better‐off in terms of overall profitability via price adjustment flexibility if both the degree of upgrade and brand equity are higher. Overall, in addition to deploying monitoring mechanisms for supervising legitimate retailers, price adjustment flexibility can reduce product diversion if the degree of upgrade is moderate and channel differentiation is higher.