The grey market (in U.S. spelling, gray market) refers to the flow of goods through distribution channels other than those authorized by the manufacturer or producer. Unlike those on the black market, grey market goods are not illegal. Instead, they are being sold outside of normal distribution channels by companies which may have no relationship with the producer of the goods. Frequently this occurs when the price of an item is significantly higher in one country than another; this situation commonly occurs with cigarettes, electronic equipment such as cameras, and wine. Entrepreneurs will buy the product where it is available cheaply, often at retail but sometimes at wholesale, import it legally to the target market and sell it a price which provides a profit but which is below the normal market price there.
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.
The existence of the grey market is an example of the economic practice called arbitrage.