Black Market

We used to hear the word ‘Black-market’ in every country. What is black market? How they sell in black market? 

Definition:

Black market is defined as illegal economic; it is a type of economic activity which takes place out of the government approval channel. They always appear when the government controls all those exchange rates which used to prevent the use of the natural exchange rates in the markets. Those things may be drugs, firearms or stolen goods which are bought and re-sold.

Example:

For an example, goods are stolen by someone and re-sold on the black market. A car sold on an extremely low price, there is a chance that the car is been stolen.

 On another way, a good which is approval by government, but due to some people avoid the proper license and taxes, which is a kind of black market. This may be in the case of unregistered firearms or cigarettes. Recently, we can even hear people are selling human organs on black market. In the illegal trades, the cost of kidneys have been rises to mostly $10, 000 in the black market which involving purchased the human organ now take place annually.

Actually, black market doesn't only mean that selling something illegal but also mean that selling different prices in the market too. 

For an example, before the government set a price ceiling in the market, a particular shop keep goods in stock till the price ceiling is set up and re-sold in a different price than the price ceiling.

Of course, if the seller cannot obtain the needed goods it’s because price ceiling reduces the quantity and it may return to the black market. 

Those sellers who are better luck or better management, receive goods in short supply can be profit by illegally selling in a higher price than the free market allows. 

Compare black market and free market, black market is higher as the quantity is less than the free market transaction, more sellers could afford to sell their product. Sometimes they may forced to buy at the higher prices when there is a shortage happens and no other place to receive these.