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A market for products that are illegal, stolen, or otherwise need to be hidden from regulatory authorities. A black market encompasses the horrific (e.g. human trafficking) as well as the more mundane (e.g. participating in the market to evade taxes). Legal products on a black market are usually less expensive than on the regulated market because sellers do not pay taxes on their goods and services. That said, there is little or no recourse for the customer if and when a black market product fails. It is worth noting that black markets tend to be largest in jurisdictions where there are the most regulations and government monopolies. It is also known as an underground market.
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black economyNONMARKETED ECONOMIC ACTIVITY that is not recorded in the NATIONAL INCOME ACCOUNTS, either because such activity does not pass through the market place or because it is illegal. Illegality is not the same as nonmarketed activity. Illegal economic activity may operate quite efficiently in the usual PRICE SYSTEM, which is determined by SUPPLY and DEMAND. Examples may be the purchase and sale of illegal drugs on the street, or alcohol in the US prohibition era of the 1920s, or foodstuffs in Britain during the Second World War when RATIONING was in force. Nonmarketed activity does not have a price determined by demand and supply Certain nonmarketed activity may be undertaken for altruistic reasons, for example, the services of a housewife on behalf of her family and the work of charity volunteers. Other nonmarketed activity is done on a BARTER basis, for example, where a mechanic services the motor car of an electrician who in return installs new light fittings in the mechanic's house. Money has not changed hands and the activity is not recorded. Most references to the black economy refer to the illegal situation of people working without declaring their income. See BLACK MARKET.
Collins Dictionary of Economics, 4th ed. © C. Pass, B. Lowes, L. Davies 2005