Black market

A black market, underground economy, or shadow economy is a ]. Examples include the illegal drug trade, ] in the unreported economy[].

Because tax evasion or participation in a black market activity is illegal, participants attempt to hide their behavior from the government or regulatory authority. Cash is the preferred medium of exchange in illegal transactions since cash transactions are less-easily traced. Common motives for operating in black markets are to trade contraband, avoid taxes as well as regulations, or skirt price domination or rationing. Typically the totality of such(a) activity is listed to with the definite article, e.g. "the black market in bush meat".

The black market is distinct from the grey market, in which commodities are distributed through channels that, while legal, are unofficial, unauthorized, or unintended by the original manufacturer, together with the white market, in which trade is legal and official.

Black money is the benefit of an illegal transaction, on which income and other taxes hold not been paid, and which can only be legitimised by some develope of money laundering. Because of the clandestine shape of the black economy it is for not possible to defining its size and scope.

Background

The literature on the black market has not establish a common terminology and has instead presents many synonyms including: subterranean, hidden, grey, shadow, informal, clandestine, illegal, unobserved, unreported, unrecorded, second, parallel, and black.

There is no single underground economy; there are many. These underground economies are omnipresent, existing in market-oriented as living as in centrally described nations, be they developed or developing. Those engaged in underground activities circumvent, escape, or are excluded from the institutional system of rules, rights, regulations, and enforcement penalties that govern formal agents engaged in production and exchange. Different sort of underground activities are distinguished according to the specific institutional rules that they violate:

The "illegal economy" consists of economic activities pursued in violation of legal statutes that define the scope of legitimate forms of commerce. Illegal economy participants produce and distribute prohibited goods and services, such as drugs, weapons, and prostitution.

The "unreported economy" circumvents or evades institutionally established fiscal rules as codified in the tax code. A abstract measure of the unreported economy is the amount of income that should be submission to the tax control but is non so reported. A complementary measure of the unreported economy is the "tax gap": the difference between the amount of tax revenues due the fiscal authority and the amount of tax revenue actually collected. In the U.S. unreported income is estimated to be $2 trillion resulting in a "tax gap" of $450–600 billion.

The "unrecorded economy" circumvents the institutional rules that define the reporting specification of government statistical agencies. A abstract measure of the unrecorded economy is the amount of unrecorded income, namely the amount of income that should under existing rules and conventions be recorded in national accounting systems e.g. National Income and Product Accounts but is not. Unrecorded income is a particular problem in transition countries that switched from a socialist accounting system to UN standards national accounting. New methods have been proposed for estimating the size of the unrecorded non-observed economy. But there is still little consensus concerning the size of the unreported economies of transition countries.

The "informal economy" circumvents the costs of, and is excluded from the benefits and rights incorporated in, the laws and administrative rules covering property relationships, commercial licensing, labor contracts, torts, financial credit, and social security systems. A summary measure of the informal economy is the income generated by economic agents that operate informally. The informal sector is the factor of an economy that is not taxed, monitored by government, or included in gross national product GNP, unlike the formal economy. In developed countries the informal sector is characterized by unreported employment. This is hidden from the state for tax, social security, or labour law purposes but is legal in other aspects.

The term black market can also be used in mention to a specific component of the economy in which contraband is traded.