Posts Tagged ‘black market’

What is the gray market?

Thursday, December 17th, 2009

Everyone has heard of the black market (at least in movies), but what is the gray market? Unlike the black market, the gray market is not technically illegal, but it is often unauthorized. Instead it’s a kind of loophole, as it involves distributing items in a way that the original manufacturer would not have wanted.

Let’s use cell phones as an example. An individual or private company buys a bunch of BlackBerrys at retail, wholesale, or discounted prices, and then resells the phones at a higher price. Usually, this new price is cheaper than what your local AT&T store will sell a BlackBerry for, so customers are more likely to spend their BlackBerry dollars there.

What and where is the black market?

Wednesday, October 7th, 2009

Drugs, guns, stolen goods, oh my! The buying and selling of these types of illegal products is the most infamous type of black market. In a more general sense, the black market is any marketplace that operates outside the law, or disregards trade or taxation regulations. It gets its name from the idea that business is done “in the dark,” out of sight.

As a trend, black markets tend to sprout up most in places with the least economic freedom. This means the countries with the most economic freedom tend to have the smallest black markets (proportionally). But countries with more corruption, regulation, and monopolies have fewer legitimate economic opportunities. For instance, North Korea has a robust black market for basic supplies like food.

In developed countries, black markets form in response to legal, regulatory, and taxation restrictions. One of the most famous examples comes from the 1920s. When prohibition made alcohol illegal in the U.S., it spawned an enormous black market where alcohol was smuggled into the country and sold at speakeasies and private bars. Spearheaded by the mafia, the black market sustained an era of organized crime and cost the U.S. an estimated $500 million in lost tax revenues every year. Economics teaches us about the laws of supply and demand; just because something becomes illegal, for instance, doesn’t mean everyone suddenly stops wanting it. Boom. Black market.

The Black Market is…

Wednesday, September 23rd, 2009

The black market is the “marketplace” for anything that is illegal to buy or sell within a country. If you are buying something in a dimly-lit back alley, you are probably buying on the black market.

Actually, I’d Rather You Send Me A Facebook Gift Than A Real One…

Friday, June 12th, 2009

Ever sent or received a gift on Facebook–and enjoyed doing so? Experts say virtual goods and money are all the rage.

  • Virtual currencies and gifts are becoming more and more popular, especially in the gaming community.
  • Some experts say there may be a future where virtual currencies are traded in the same markets as real-world currencies. Right now, there’s even a black market for certain virtual currencies.
  • Joe Seller, a virtual world expert, believes the popularity of virtual goods stems from people wanting to take their online identities more seriously.

Facts & Figures

  • People transfer at least $1 billion into the virtual currencies each year, most of that going into online games.
  • WoW Gold, the World of Warcraft currency, is so popular that some low-wage workers in China play the game for a living and then sell their earnings to determined gamers in the West.

Best Quote

“They can’t eat the cake. It’s an image–the thing that it represents. You can send the feeling of that [cake] that you want to send.” – Santiago Martinez, virtual currency user