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Internet Thwarting Price Discrimination, Gray Markets Explode

The price liquidity long promised by the free flow of information on the internet may indeed be coming to fruition, as shown by an e-commerce analysis conducted by News.com. Manufacturers are finding it difficult to exert price discrimination between regions - even continents - or even charge less for educational use or other market price segmentations. In attempting to maximize profitable revenue, companies often segment their markets into different blocks, charging those willing to pay more a higher cost. eBay, Froogle, Amazon.com and other sources of massive price databases are making that harder and harder to do.

Of particular concern to manufacturers is the "gray market," where products are bought in one region at a low price that takes into account, for instance, the lack of a warranty. Those products can be re-sold to Californians who expect the company to stand behind them. Companies are trying to crack down on this by issuing take-down notices to auction sites when they suspect this is going on, but the "whack-a-mole" game of finding and thwarting these market forces cannot be won.

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