Underground Economy Research Paper

Underground economy, also called the black market, is a market where capital, goods and services change hands in violation of applicable laws. Such markets tend to occur when there is poor rationing (such as in wartime), where goods are prohibited (such as illegal drugs), or in planned economies where production is not able to satisfy consumers need.

The black market is named after the image of a rather down market in the evening or at night. It’s an underground market where no permitted assets may be sold, which are prohibited in the public market. It is related to the smuggling in the fact that the regulatory and tax restrictions in power are circumvented, and where illegal goods find their place, such as weapons, drugs and organs. Such market fosters corruption, and so more general crime.

If you are trying you best to write a research paper on the topic you have to know that underground economy appears in times of shortage, pushing up commodity prices.

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In general, political power intervenes to block the price and organize special distributions (rationing), prompting sellers to seek a more lucrative market: the black market. Even in the absence of such intervention, sellers do not need to pay taxes, and it becomes risky for them; however, it does not qualify this black market: operators do not run the same risks (legal) and do not need to be associated with other illegal activities.

Underground economy is generally an open secret: everyone knows it exists, everyone uses it (either as buyer or as seller). A proportion of the goods provided for the official market is still diverted to the black market, often with internal high-level complicity; this increases the scarcity and drives up prices on the black market for the benefit of its organizers.

The main goal of the underground economy is to escape taxation systems. Its mode of operation relies on transnational offshore platforms and establishing companies in financial havens disabling thus state bodies to fight against the laundering of dirty money.

Black markets still exist and tend to increase with the Internet. Thus, by using the anonymous network Tor, a black market called Silk Road specializes in the sale of narcotics has seen its appearance.

The entertainment and music is very touched by the black market. Approximately 20-30% of shows and concerts tickets are recovered by networks reselling these tickets on the black market. At the disposal of places, robots automatically buy tickets in large numbers causing a fast stock break.

These seats will be sold to the general public up to 10 times their original price. The Prodiss, union of musical and variety, launched the website getaticket to raise public awareness and to fight against the black market.

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