What is Black Market in Economics?
A Black Market is an illegal market often known as the gray market where there are illegal transactions happening in the process of purchasing goods or selling them, in simple terms illegal trade and transfer of money.
It is very interesting to know that it is a huge market and it is very organized, surprisingly though! The traders in this market do not bother about the normal legal rules applicable to the market.
It can also be called the Shadow Economy, Underdog, Underground Market, Black Economy, and Parallel Economy. A few famous things most sold and traded are clothes, jewels and accessories, perfumes, weapons, electronic goods, pirated things, drugs, and so on.
Types of Goods Sold
There are two types of goods that are sold on the black market. One is illegal goods, which would be drugs, weapons, or the case of stolen goods. The second one is the sale of legal goods in the wrong way or the illegal way. These would be things that are sold for higher prices like the goods which would require licenses and so on.
What are the Factors Supporting the Black Market?
It may sound the opposite way, but when the rules are stricter in a government, more is a chance of a black market in that field. It could also be happening when there is a monopoly or shortage of the product in demand. People would want to pay more in order to get the product that is essential for them. It could also be triggered in times of war and crisis, disasters, and so on.
What Are The Prices in a Black Market?
In the case of the goods easily available in the market, the prices are lower in the black market. It is true in the case of goods like pirated CDs. But when the good is in demand, the price would be higher. It depends on the situation.
What is Grey Market?
It is not exactly the black market scenario. The goods that are sold in this case are not illegal goods. The only thing that happens here is that there are no proper channels that are used to sell these goods or buy them.
How To Reduce The Menace Of Black Markets?
The best way to do this would be to reduce the restriction levels in the government. The people will not go to the black market to buy their goods. If the government wants to lay down strict rules about something, they can very well do it in a way that the public is aware of the black market and the ill effects that would lead from it.
