Overview
Black markets are exchanges for products and services that have been outlawed by a state entity.
Historically, government efforts to ban substances like alcohol or addictive processes like gambling tend to shift economic activity into black markets. Localized crime rings or organized crime syndicates often recognize that laws do not remove people’s incentives to pursue illicit activities or contrabrand, so they build alternative economies that take advantage of the limitations of a system to surveil itself. Even the most totalitarian regimes in countries like North Korea fail to successfully crackdown on contraband, although, the price of illicit goods and services can go up to skirt regulations just as they do when complying with regulations.
The United States had a famously disastrous Prohibition of alcohol that led to a constitutional amendment banning alcohol. In practice, bootleg operations filled the gap with poorer quality products that led to an increase in public health issues. Wealthy individuals were still able to procure alcohol for lavish parties while working-class drinkers visited black market sellers. It was enormously profitable for organized crime syndicates that considerably marked up both.