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What is the Black Market?

By O. Wallace
Updated May 16, 2024
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The black market is not a physical place, but rather an economic activity in which merchandise and/or services are bought and sold illegally. Also called the “underground market,” this market gets its name due to the fact that its activity is conducted out of sight and often “in the dark,” outside the sight of law enforcement. It can be illustrated by something as innocent and innocuous as selling gum on the playground, or by something as serious as the sale of smuggled weapons or drugs.

Many factors can make a transaction illegal, thus qualifying it as a black market transaction. The good or service itself may be illegal, such as illicit drugs, weapons, or prostitution. One prime example of an illegal market created because of an illegal product was the result of prohibition. After alcohol was outlawed in the U.S. in 1919, it was smuggled into the country and sold at speakeasies and private bars. The result was an era of organized crime and an estimated 500 million US dollars (USD) in lost tax revenues annually.

An example of an illegal service sold on the black market is prostitution. Outlawing the prostitution of women and children throughout most of the world has created a huge illicit sex trade. Countries where this type of illegal market flourishes are a destination spot for those seeking to pursue this activity.

In other cases, goods may be stolen and then re-sold on the black market. When a good is euphemistically referred to as having “fallen off the back of a truck,” usually it means that it has been stolen for the purpose of being sold illegally. If you are purchasing a new stereo, for example, from an individual at an extremely low price, there’s a good chance that it’s been stolen. Another way that a transaction can be illegal is if it is an otherwise legal good or service that is bought or sold in such a way as to avoid proper licensing or taxes. This is the case with unregistered firearms and cigarettes, which usually include a hefty local, state, or federal tax.

Due to man’s inherently entrepreneurial nature, coupled with government’s pesky tendency to regulate, black markets can and do exist everywhere. They do, however, tend to develop more readily in states or countries with especially heavy regulation. Even though a good or service becomes outlawed or heavily regulated, the market may continue to demand it. As a result, the black market springs up to meet the market’s demand. This is the case when governments place price controls, rationing or complete prohibition on a good or service.

Although the consumer’s demand is met, usually the seller or “black marketeer” is the one who profits from a transaction. Prices on this market tend to be higher due to smaller supply and constant demand. The risk that a marketeer takes in acquiring and selling a good or service is also included in the price. If it is a difficult good to acquire, it will have a higher price as well. At times, prices can be lower if the seller has lower “overhead” because he or she stole the good or is avoiding high taxes.

Consumers are often willing to overlook the illegality of a black market transaction if they feel that the good or service is “harmless.” This is often the case with illegal prostitution and also applied to alcohol sales during prohibition. Although some people think that most illegal transactions are relatively harmless, the money generated is often used for nefarious purposes. The mafia in the U.S. thrived during prohibition, resulting in bloody battles over turf and profits. Governments combating illegal markets spend vast fortunes fighting organized crime and racketeering, and lose millions in tax revenues from the prohibited good.

Many solutions to the black market have been proposed, including deregulation, legalizing drugs and prostitution, and increasing supply of a particular good. Some argue that this is a concession to criminals and drug users, while others argue that government resources can be put to better use.

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Discussion Comments

By anon999819 — On Mar 22, 2018

The Black Market is awful. You can't go around selling other people's organs and selling recreational drugs. People still buy stuff on the Black Market like cocaine and cannabis. Can you sell things like kidnapped children? I don't know myself and I was wondering if anyone knew of children put into slavery or beaten because of the Black Market.

By anon999469 — On Jan 12, 2018

You forgot about counterfeiting.

By anon313815 — On Jan 14, 2013

@ Post42: The black market existed well before the United States banned alcohol. Think about slavery! You don't believe that was any kind of a black market, or hell let's go to the Greeks. You don't think they illegally traded or sold human beings for slavery and prostitution? The fact is, that it happens every day and it's all around us.

Whether you participate it in or not we, are all involved in it in some way or another. Illegal downloading of music or movies, and bootlegging them for profit.

By anon295598 — On Oct 07, 2012

Do they still sell children in today's world?

By anon274221 — On Jun 10, 2012

Black markets are everywhere, all the time. Just look at what is prohibited or illegal or scarce and you will know there is a market you don't see for it. Governments create black markets by statute and regulation. If they said and did nothing, the black markets would not exist or would not thrive.

By anon256027 — On Mar 20, 2012

The black market is a scary business. Once you start you can't stop!

By anon168755 — On Apr 18, 2011

since the black market is actually just the act of illegally selling things from candy, songs downloaded from the internet illegally and giving them freely like limewire does. Everyone becomes part of the black market whether they know it or not. buying a piece of candy then selling it for more is actually an act of black marketing, believe it or not. the black market cannot be stopped. it will stay as long as there is a way of trade and service like the entire world uses.

By anon166358 — On Apr 08, 2011

Some of you seriously need to take your time when you read an article. You are all asking questions that were covered and answered. Were the answers too detailed or just the words were too big for you to understand!

By anon164649 — On Apr 01, 2011

When down in Honduras, I'd sell $1 and get 8 lempiras from the guy on the corner since the bank was offering only 2. How does the guy on the corner make money?

By anon156901 — On Feb 28, 2011

I need a chemical called chloroform for a story I'm writing, but as far as I know, it's practically impossible to come by unless you happen to be some kind of scientist. In the story, though, I'm trying to keep things at least fairly legal, but I think I'll need the assistance of the black market. Thing is, I don't know how it works exactly.

By anon152905 — On Feb 15, 2011

why do price controls often lead to black markets?

By anon137015 — On Dec 25, 2010

Number 55 yes they do sell other peoples organs.

By anon96653 — On Jul 16, 2010

Do they sell other people's organs in the black market?

By anon95907 — On Jul 13, 2010

Ninety percent of your questions are answered in the article. Where is the black market? It's not a place. What is sold on the black market? Anything that is illegal. Reason for existence? Illegal goods are *illegal!* Getting inside it? What? It's not a place. And that is precisely what undercover policemen do with the drug trade. There is no central "Black Market". It is a euphemism for any illegal transaction.

By anon94429 — On Jul 08, 2010

The black market seems helpful in certain places. Why don't you just make some of the things legal in third world countries rather than have them continue on doing things illegally that will hinder the growth of the countries?

By anon91848 — On Jun 24, 2010

we have black markets in england. counterfeit goods are sold on private outdoor markets.

By anon81853 — On May 03, 2010

true the IRA or British republican army is not exactly an army -- it is guys that buy weapons on the black market.

By anon81261 — On Apr 30, 2010

I am curious to know whether or not the black market is actually real or not. Is it just a scam?

By anon80628 — On Apr 28, 2010

The black market was made in reaction to the united states banning beer, whiskey that kind of stuff. Since then it expanded to include Illegal weapons, submachine guns, assault rifles, explosives, drugs, animals apparently, possibly even down to gasoline and other types of fuel. Whatever you buy and sell is probably being sold or bought cheaply on the black market.

There's a kind of organization and disorganization to the black market, depending on certain demands or goods. Like nasturtium said, it depends on the culture, so it can be highly organized, or it can be one person.

If you're buying and selling illegal items, you're black marketing. Gangs, the Mafia, any organized crime buys and sells some type of goods on the black market, either in the States, the UK or anywhere. ESD for life.

By anon79004 — On Apr 21, 2010

black market is an abstract, neither can be seen nor touched.it's an action where in those black marketeers are selling products behind the knowledge of law enforcers.

By anon74076 — On Mar 30, 2010

I want to know how to use the black market.

By anon72673 — On Mar 24, 2010

thank you very much. i have one more question.

prostitution, which is already legalized in some countries, is it again a part of the black market?

By anon70202 — On Mar 12, 2010

I want to have more details about Tunnel Trade and if there are references, boxes, articles related to the subject.

By anon66403 — On Feb 19, 2010

does anyone know how to get inside the black market? i think if we get inside it we can take it down.

By anon65175 — On Feb 11, 2010

It unfortunately happens in my country India too.

By mliviu86 — On Jan 25, 2010

Hello everybody. Can anyone tell me how you can estimate the value of a black market? Thank you.

By anon60311 — On Jan 13, 2010

the black market is real! this is a serious issue! the government might be tracking down people who sell drugs through the black market, but i think we should be more concerned with the selling of animals, endangered animals.

For example people are buying Komodo dragons, which are really rare for a pet! isn't that crazy? a Komodo dragon has a really toxic poison in its saliva and animals die when they get in touch with the saliva. However, scientists don't want it to be killed because they need to know what the mystery is, what the Komodo dragon has in its blood that makes itself immune to its own saliva.

By anon58014 — On Dec 29, 2009

Seriously -- did any of you actually read the article?

By anon55839 — On Dec 10, 2009

Could you sell, say, gum? At a black market? Just curious. Also does anyone think human hair would be acceptable? Being completely serious here folks.

By anon54259 — On Nov 28, 2009

Where does one find black market stuff?

By anon50760 — On Oct 31, 2009

is the united kingdom against the black market?

more specific: the black market organ trade.

By anon50582 — On Oct 29, 2009

The black market cake is a lie in my opinion.

By anon44684 — On Sep 09, 2009

There is great information online about the black market, including counterfeit goods, human trafficking, and the global drug trade.

By anon39066 — On Jul 30, 2009

what is the basic reason behind black market?

By anon39065 — On Jul 30, 2009

what type of items are sold through black market?

By anon37238 — On Jul 17, 2009

what is the effect of black market?

By anon34266 — On Jun 19, 2009

Hey don't they sell body parts and babies and stuff like that on the black market? I heard they do in some cases and I recently looked up a movie called "Sick Nurses". It's where the nurses use dead body parts from their patients to sell on the black market.

By anon31938 — On May 13, 2009

How do you find the black market?

When did it first start?

By anon31649 — On May 09, 2009

what is the effect of black market?

By anon30475 — On Apr 20, 2009

It doesn't matter what it is, a black market arises when a government makes trafficking or possessing something which has a demand illegal.

By anon27091 — On Feb 23, 2009

So how does one find the black market?

By anon19876 — On Oct 21, 2008

what is the basic reason behind black market?

By anon13866 — On Jun 05, 2008

Many things are sold on the black market such as drugs, weapons and prostitution. And sometimes things such as kids. This might seem weird but like in china they will buy a boy kid from a black marketer because they have a girl and can't have another kid because of the one child policy.

By anon13406 — On May 26, 2008

what type of Items are sold through blackmarket?

By nasturtium — On Mar 29, 2008

Depending on the country, the black market can be very accepted. In the US, it is often looked down upon, but in many third world countries, everyone buys things on the black market - it's just how it's done. It just depends on the culture.

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