Black Market - Appearance and Disappearance

Appearance and Disappearance

If an economic good is illegal but not seen by many in society as particularly harmful, such as alcohol under prohibition in the United States, the black market prospers. Black marketeers can reinvest profits in diverse legal or illegal activities, well beyond the original source of profit.

Some, for example in the marijuana-trade debate, argue for removing the underground markets by making illegal products legal. This would, in their view:

• decrease the illegal cashflow, thus making the performance of other, potentially more harmful, activities financially harder
• allow quality and safety controls on the traded goods, thus reducing harm to consumers
• let the goods be taxed, providing a source of revenue
• free up court time and prison space and save taxpayer money.