Final answer:
The practice in question is known as gray market distribution, where companies divert products from low-price markets to high-price markets for profit, despite frequently being against the law. It is driven by excess supply and the lure of higher profits.
Step-by-step explanation:
The student's question pertains to a practice known as gray market distribution, which involves the sale of products by channels that are unauthorized by the manufacturer. This occurs when products are bought in a low-price market and subsequently diverted to sell in other markets typically at a higher price. This is driven by the allure of higher profits, making it a compelling, yet often unlawful, business strategy.
Such activities are often motivated by market dynamics; for example, if there is an excess supply driving prices below production costs, companies might engage in gray market activities to sell the goods in more lucrative markets. However, practices like predatory pricing are illegal and frowned upon as they manipulate market forces and harm competition.