# Black market Canonical: https://web4.xpay.bi/en/wiki/wp-en-18618063/ Language: en Published: 2026-10-26T16:16:30.820Z Updated: 2026-10-26T16:16:30.820Z A black market is a clandestine market or series of transactions that has some aspect of illegality within a legal jurisdiction; it may also not be compliant with an institutional set of rules. If the rule defines the set of goods and services whose production and distribution are prohibited or restricted by law, non-compliance with the rule constitutes a black-market trade since the tra ## Key facts ## Overview A black market is a clandestine market or series of transactions that has some aspect of illegality within a legal jurisdiction; it may also not be compliant with an institutional set of rules. If the rule defines the set of goods and services whose production and distribution are prohibited or restricted by law, non-compliance with the rule constitutes a black-market trade since the transaction itself is illegal. Such transactions include the illegal drug trade, prostitution (where prohibited), illegal currency transactions, and human trafficking. Participants often conceal illegal behavior from government authorities or regulators. Cash remains the preferred medium of exchange for illegal transactions, as it is more difficult to trace. Common reasons for engaging in black market activity include trading contraband, avoiding taxes or regulations, or evading price controls and rationing. Such activities are generally referred to using the definite article, e.g., "the black market in bush meat". The black market is distinct from the grey market, in which commodities are distributed through channels that, while legal, are unofficial, unauthorized, or unintended by the original manufacturer, and the white market, in which trade is legal and official. Black money is the proceeds of an illegal transaction, on which income and other taxes have not been paid. Black money is often associated with money laundering, a process used to conceal the illegitimate source of the money. Because of the clandestine nature of the black economy, it is not possible to determine its size and scope. ## Definition The literature on the black market has not established a common terminology and has instead offered many synonyms including subterranean, hidden, grey, shadow, informal, clandestine, illegal, unobserved, unreported, unrecorded, second, parallel, and black. There is no single underground economy; there are many. These underground economies are omnipresent, existing in market oriented as well as in centrally planned nations, be they developed or developing. Those engaged in underground activities circumvent, escape, or are excluded from the institutional system of rules, rights, regulations, and enforcement penalties that govern formal agents engaged in production and exchange. Different types of underground activities are distinguished according to the particular institutional rules that they violate: The illegal economy The unreported economy The unrecorded economy The informal economy The "illegal economy" consists of economic activities pursued in violation of legal statutes that define the scope of legitimate forms of commerce. Illegal-economy participants produce and distribute prohibited goods and services, such as drugs, weapons, and prostitution. The "unreported economy" circumvents or evades institutionally established fiscal rules as codified in the tax code. A summary measure of the unreported economy is the amount of income that should be reported to the tax authority but is not so reported. A complementary measure of the unreported economy is the "tax gap": the difference between the amount of tax revenues due to the fiscal authority and the amount of tax revenue actually collected. In the U.S. unreported income is estimated to be $2 trillion resulting in a "tax gap" of $450–600 billion. The "unrecorded economy" circumvents the institutional rules that define the reporting requirements of government statistical agencies. A summary measure of the unrecorded economy is the amount of unrecorded income, namely the amount of income that should (under existing rules and conventions) be recorded in national accounting systems (e.g., National Income and Product Accounts) but is not. Unrecorded income is a particular problem in transition countries that switched from a socialist accounting system to UN standard national accounting. New methods have been proposed for estimating the size of the unrecorded (non-observed) economy. However little consensus exists on the size of the unreported economies of transitional countries. The "informal economy" circumvents the costs of, and is excluded from the benefits and rights incorporated in, the laws and administrative rules covering property relationships, commercial licensing, labor contracts, torts, financial credit, and social security systems. A summary measure of the informal economy is the income generated by economic agents that operate informally. The informal sector is part of an economy that is not taxed, monitored by the government, or included in the gross national product (GNP), unlike the formal economy. In developed countries, the informal sector is characterized by unreported employment. This is hidden from the state for tax, social security, or labor law purposes but is legal in other aspects. The term black market can also be used in reference to a specific part of the economy in which contraband is traded. ## Pricing Goods and services acquired illegally and/or transacted for in an illegal manner may exchange above or below the price of legal market transactions: They may be cheaper than legal market prices. The supplier does not have to pay for production costs and/or taxes. This is usually the case in the underground economy. Criminals steal goods and sell them below the legal market price, but there is no receipt, guarantee, and so forth. When someone is hired to perform work and the client is unable to write off the expense (particularly common for work such as home renovations or Cosmetology services), the client may be inclined to request a lower price (usually paid in cash) in exchange for foregoing a receipt, which enables the service provider to avoid reporting the income on his or her tax return. They may be more expensive than legal market prices. For example, if the product is difficult to acquire or produce, dangerous to handle, is strictly rationed, or is not easily available legally if at all. If the exchange of goods is made illegal by some sort of state sanction, such as with certain drugs or wildlife trafficking, their prices will tend to rise as a result of that sanction. ## Consumer issues No government, no global nonprofit, no multinational enterprise can seriously claim to be able to replace the 1.8 billion jobs created by the economic underground. In truth, the best hope for growth in most emerging economies lies in the shadows. Even when the underground market offers lower prices, consumers may still buy on the legal market, when possible, because: They may prefer legal suppliers, as these are strictly regulated and easier to contact. In contrast, black market vendors are unregulated and difficult to hold accountable. In some jurisdictions such as the United States, customers may be charged with a criminal offense if they knowingly participate in the black economy. They may have a moral dislike of black marketing. In some jurisdictions such as England and Wales, consumers found in possession of stolen goods can have them confiscated if they are traced, even if they did not know they were stolen. Though they themselves do not usually face criminal prosecution, they are still left without the goods they paid for and have little if any recourse to get their money back. This may make some averse to buying goods that they think may be from the underground market, even if in fact they are legitimate (for example, items sold at a car boot sale). However, in some situations, consumers may conclude that they are better off using black market services, particularly when government regulations hinder what would otherwise be a legitimate competitive service. For example, in Baltimore, many consumers actively prefer illegal taxi operations, citing that they are more available, convenient, and fairly priced. ## Traded goods and services Some examples of underground economic activities include: ## Prostitution Prostitution is illegal or highly regulated in some countries. This demonstrates the underground economy, because of consistent high demand from customers, relatively high pay, but labor-intensive and low-skilled work, which attracts a continual supply of workers. While prostitution exists in every country, studies show that it tends to flourish more in poorer countries, and in areas with large numbers of unattached men, such as around military bases. For instance, an empirical study showed that the supply of prostitutes rose abruptly in Denver and Minneapolis in 2008 when the Democratic and Republican National Conventions took place there. Prostitutes in the black market generally operate with some degree of secrecy, sometimes negotiating prices and activities through codewords and subtle gestures. In countries such as Germany or the Netherlands, where prostitution is legal but regulated, illegal prostitutes exist whose services are offered more cheaply without regard for the legal requirements or procedures—health checks, standards of accommodation, and so on. ## Personal information Personally identifying information, financial information like credit card and bank account information, and medical data are bought and sold, mostly in darknet markets. People increase the value of the stolen data by aggregating it with publicly available data, and selling it again for a profit, increasing the damage that can be done to the people whose data was stolen. ## Illegal drugs From the late 19th and early 20th centuries, many countries began to ban the possession or use of some recreational drugs, such as in the United States' war on drugs. Many people nonetheless continue to use illegal drugs, and a black market exists to supply them. Despite law enforcement efforts to intercept them, demand remains high, providing a large profit motive for organized criminal groups to keep drugs supplied. The United Nations has reported that the retail market value of illegal drugs is $530 billion. Although law enforcement agencies intercept a fraction of drug traffickers and incarcerate thousands of wholesale and retail sellers and users, the demand for such drugs and profit margins encourage new distributors to enter the market. Drug legalization activists draw parallels between the illegal drug trade and the Prohibition of alcohol in the United States in the 1920s. ## Weapons The laws of many countries forbid or restrict the personal ownership of weapons. These restrictions can range from small knives to firearms, either altogether or by classification (e.g., caliber, handguns, automatic weapons, and explosives). The black market supplies the demands for weaponry that cannot be obtained legally or may only be obtained legally after obtaining permits and paying fees. This may be by smuggling the arms from countries where they were bought legally or stolen, or by stealing from arms manufacturers within the country itself, using insiders. In cases where the underground economy is unable to smuggle firearms, they can also satisfy requests by gunsmithing their own firearms. Those who may buy this way include criminals to use for illegal activities, gun collectors, and otherwise law-abiding citizens interested in protecting their dwellings, families, or businesses. In England and Wales, certain categories of weapons used for hunting may be owned by qualified residents but must be registered with the local police force and kept within a locked cabinet. Among those who may purchase weapons on the black market are people who are unable to pass the legal requirements for registration—convicted felons or those suffering from mental illness for example. ## Illegally logged timber The illegal logging of timber, according to Interpol, is an industry worth almost as much as the drug production industry in some countries. ## Animals and animal products In many developing countries, living animals are captured in the wild and sold as pets. Wild animals are also hunted and killed for their meat, hide, and organs, the latter of which and other animal parts are sold for use in traditional medicine. In several states in the United States, laws requiring the pasteurization of milk have created black markets in raw milk, and sometimes in raw milk cheese which is legal in a number of EU countries but banned in the U.S. if aged less than 60 days. ## Alcohol Rum-running, or bootlegging, is the illegal business of transporting (smuggling) alcoholic beverages where such transportation is forbidden by law. Smuggling is usually done to circumvent taxation or prohibition laws. The term rum-running is more commonly applied to smuggling over water; bootlegging is applied to smuggling over land. According to the PBS documentary Prohibition, the term "bootlegging" was popularized when thousands of city dwellers would sell liquor from flasks they kept in their bootleg all across major cities and rural areas. The term "rum-running" most likely originated at the start of Prohibition in the United States (1920–1933), when ships from Bimini in the western Bahamas transported cheap Caribbean rum to Florida speakeasies. Rum's cheapness made it a low-profit item for the rumrunners, and they moved on to smuggling Canadian whisky, French champagne, and English gin to major cities like New York City and Boston, where prices ran high. It was said that some ships carried $200,000 (roughly equivalent to US$4.5 million in 2022) in contraband in a single run. ## Sources - Black market · Wikipedia: https://en.wikipedia.org/?curid=18618063 Source: Wikipedia contributors — https://en.wikipedia.org/?curid=18618063&oldid=1381210639 Licence: CC BY-SA 4.0 — https://creativecommons.org/licenses/by-sa/4.0/ Adaptation notice: Reformatted for XPay; the source may be abridged, restructured or translated. Consult the cited revision for the original.