Black market

The black market is the sector of economic activity involving illegal economic dealings, typically the buying and selling of merchandise illegally. The goods may be themselves illegal, such as the sale of prohibited weapons or the illegal drug trade; the merchandise may be stolen; or the merchandise may be otherwise legal goods sold illicitly to avoid tax payments or licensing requirements, such as cigarettes or unregistered firearms. It is so called because "black economy" or "black market" affairs are conducted outside the law, and so are necessarily conducted "in the dark", out of the sight of the law.

Examples of black markets

The Prohibition period in the early twentieth century in the United States is a classic example of black market activity. Many organized crime groups took advantage of the lucrative opportunities in the resulting black market in banned alcohol production and sales. Since much of the populace did not view drinking alcohol as a particularly harmful activity that ought to be legally banned, illegal speakeasies prospered, and organizations such as the Mafia grew tremendously more powerful through their black market activities distributing alcohol.

Related Topics:
Prohibition - United States - Organized crime - Alcohol - Speakeasies - Mafia

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Another classic example is Burma under the rule of Ne Win. Under his "Burmese Way to Socialism", the country became one of the poorest in the world, and only the black market and rampant smuggling supplied the people's needs.

Related Topics:
Burma - Ne Win - Smuggling

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Nowadays in many countries, it is argued a "war on drugs" has created a similar effect for drugs such as marijuana, heroin and cocaine. Despite ongoing law enforcement efforts to intercept illegal drug supplies, demand remains high, encouraging organized criminal groups to ensure their availability. While law enforcement efforts often capture distributors of illegal drugs, the high demand for such drugs ensures that black market prices will simply rise in response to the decrease in supply—encouraging new distributors to enter the market in a perpetual cycle.

Related Topics:
War on drugs - Marijuana - Heroin - Cocaine

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Similarly, since prostitution is illegal in many places and yet market demand for the services of prostitutes remains high, a black market usually develops.

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Black markets can also form near when neighboring jurisdictions have substantially different tax rates on similar products. Products that are commonly smuggled to fuel these black markets include alcohol and tobacco.

Related Topics:
Smuggled - Tobacco

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Black markets flourish in most countries during wartime. The rationing and price controls enforced in many countries during World War II encouraged widespread black market activity. Due to severe shortages of consumer goods, black markets thrived in communist Eastern Europe and the Soviet Union.

Related Topics:
Wartime - Rationing - Price control - World War II - Eastern Europe - Soviet Union

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