Final answer:
Parallel imports, also known as gray markets, occur when products are imported and sold outside of the authorized distribution channels. This can happen due to differences in pricing strategies, taxes or currency exchange rates.
Step-by-step explanation:
Parallel imports are also referred to as gray markets. Gray markets occur when products are imported and sold outside of the authorized distribution channels defined by the manufacturer or brand owner. These products are typically genuine, but they are sold at a lower price than the authorized versions.
One example of gray markets is when individuals or companies buy branded products in one country where they are cheaper and then sell them in another country where they are more expensive. This happens because of differences in pricing strategies, taxes, or currency exchange rates. Gray markets can affect the brand's reputation and the authorized distribution network.