The existence of a black market is because people have to exchange goods and services that are prohibited by the government. As transactions are unrecorded, black markets skew the economic data and cause misguidance to the authorities. People also get involved in black marketing because they don’t want to pay taxes on their transactions for both legal and illegal goods. Sometimes, it is mind-boggling to know that people are simply unaware of the laws created against such illegal activity and that they are violating the laws.
Black Market – WHY IS THERE A BLACK MARKET?
In order to regulate the economic activities for the good of the nation, licensing authority restricts some occupations. In this way, workers opt for black marketing. Black marketing also arises because people are unable to pay a huge amount of taxes for the registration of certain businesses. In the case of illegal immigrants, black marketing is done more. Black markets also boom when there is a disaster situation and supply shortages are on the rise. Additionally, the over regulation of governments also gives way to black marketing. The ineffective central planning of communist states discourages the investment side of the economy which forces people to choose black marketing. Also, black marketing rises due to less or no job opportunities for people in the legal market.