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What Is the Black Market?

The black market refers to any illegal trade of products or services. It gets its name from the fact that these transactions are made secretly, keeping law enforcement agencies “in the dark.” It is sometimes referred to as the “underground market”— or any private code that people might use to initiate an illegal deal.

Since a black market deal is, quite generally speaking, a transaction that breaks a rule, then it covers the relatively “innocent” deal of kids selling gum in the classroom to large-scale drug smuggling.

The best way to look at it is to identify what ways a sale can be illegal. Perhaps the product or service itself is frowned upon, such as banned weapons or prostitution. Sometimes a country may ban a product that is allowed in other places—such as the prohibition of 1919, when the United States outlawed alcohol.
Sometimes the product or service is not, in and of itself, bad—but the means of acquisition is. For example, there is a black market of stolen car parts, or cigarettes that are unregistered and escape the large government taxes.

In many parts of Asia, there is a thriving black market of pirated DVD’s and CD’s sold at rock-bottom prices. These goods, however, break copyright laws. Fake designer bags or T-shirts, made from cheap materials but copying the appearance of expensive Hermes, Louis Vuitton and Gucci products, are also openly sold on streets in Thailand and China. While their governments turn a blind eye, these are (in international law) black market goods that would be seized at airports if brought into European or even American soil.

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