The black market is noted as the “underground economy.” It refers to not only legal activities in industries, but in which illegal activities take place (i.e. paying people under the table or not withholding taxes), and it also encompasses illegal activities, such as drug dealing and the sex industry.
What is sold on the black market?
Today, a wide variety of goods can be found on the black market. Stolen organs, which are also illegally sold, can be found. Drugs—both street and prescription can be found. People have even gone as far as entering veterinarian drugs on the market as well. Prostitution and the sex slave industry are big ones. Mail bride orders exist today. Weapons make up a big market. The list encompasses jewelry, clothing, and anything else illegally obtained.
Where is the black market?
The black market is said to be smallest in free economies and run deeply in corrupt economies, where various goods and services are restricted. However, many would argue that it runs just as deeply here in the United States, as anywhere else. The difference is that while in small countries, less regulated and more corrupt, individuals support these goods and services publicly—whereas here, people do it in secret. Depending on the product or service on the black market, the demand is going to be different. Thus, in some areas the black market will flourish, while in other areas not so much. Trends show that there are high demands for drugs of any sort and electronic devices in school settings. Military bases, poor countries, and areas with large numbers of single males show a high demand for prostitution. Weaponry is often illegally sold to smaller, poorer countries. Again, each market is dependant on demographics.
People typically pay more for items on the black market. The reason for such is because people are typically desperate, who purchase illegal items. By these particular items, I am referring to drugs and sex. This does not apply to every good and service sold on the black market, but generally speaking, that is the trend. Perhaps, stolen electronic devices on the illegal market will be sold at a discount, compared to store prices. It all depends on the seller / distributor. One example of this is the movie industry. In many foreign countries, individuals can obtain copies of illegally copied movies (which are still in theatres) for $0.50 in U.S. currency.
What happens to the Supply and Demand Curve, as a result of the black market?
Typically, this curve shows sharp drops in supply, as production or distribution of a product has been made illegal, and therefore people stop supplying such product (since penalties can be fierce). Moreover, the demand curve also drops, because people, who wish to follow the law, no longer wish to purchase it, as they, too, can get in trouble with authorities. Of course, just because the government creates a black market, this does not mean that consumers will refrain from producing, selling, distributing, or purchasing black market products. Drug users still want drugs, though they are illegal. People involved with prostitution, still want these services.
When do black markets thrive?
Generally speaking, black markets do best during periods of wartime. Our country has seen this through history of World War II and the Vietnam War. Reasons go back to what was said above when high restrictions are placed. For example, in periods of wartime, many items are rationed. Thus, consumers will find goods they want and pay double or triple the price.
The black market is a very real market today. While authorities strive to bring it down, there will probably always be a demand for black market products and services. While our nation strives to rid itself of drugs and other harmful substances, this market will naturally occur. Because of the vices of men, it will also flourish.
