Underground Economy

the black 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.

. 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.

Black market prices tend to be higher due to smaller supply and constant demand. The risk that a black 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.” People are able to sell organs as much as 100,000 dollars on the black market.