If you were advising your government on stemming black market economies, what would you propose - Essay Example

Also, the term “underground market” used to also describe a black market is based on the actual activity done secretly, avoiding the knowledge of authorities and the government. Some of the examples of black market would be the trade of food, drugs, weapons, and even people (What is the Black Market, n.d.). Indeed, though people has built the mindset that black market is wrong mainly because it is against the law, it is also imperative to know its effects on one’s economy and its future relations with other states.

Now when products such as weapons or drugs are being purchased through the black market, the supply and demand of the specific merchandise would be greatly affected, even towards its indirect substitutes, causing the purchase habit of consumers, pricing, and the market environment and conditions to change. An imminent result to which would be the imminent drop in demand from legal businesses because people would prefer to buy from the black market because of the significantly low prices (The Effects of a Black Market Using Supply and Demand, n.d.).

Because of this, the profitability of legal businesses decreases which stunts the growth of economy while a chosen few who are involved in the black market gets a good earning without having to pay taxes which is used to fund projects for its people. Aside from that, the price elasticity of goods in the market will also change based on the supply from the black market while the legal businesses will most likely institute a price hike. However, if this market condition stretches to a longer period of time, businesses would resort to lowering their prices just so they can survive as a business while catering to the needs of consumers.

With all these said, the black market truly has effects on state sovereignty, forein policy, international economy, domestic & international security, and human rights. Speaking of its effect on human rights, each government has the responsibility of providing fair goods to each individual at the same prices. With the black market, only people who have access to the underground market get to benefit a significantly low priced goods (Black Market and its Consequences, n.d.). The black market also affects international trade/economy as it causes a shortage of goods especially when the chosen few who have access to the black market decide to hoard all the goods to maximize the benefits of its low price, leaving the legal businesses to have a lack in goods to resell.

Because of this, the supply of imported goods start, in order to meet the increasing demand of a specific product from people (Black Market and its Consequences, n.d.). The danger here is when only the rich one’s are able to afford the goods while the poor people are left with nothing they can afford. When it comes to domestic and international security, the black market poses doubt and puts a high risk transaction on any imported goods for domestic security and exported goods for international security.

Thus, excessive regulations in foreigh policies will be instigated that would slow down trade activities (Black Market and its Consequences, n.d.). Also, generally, state sovereignty will now be controlled by those with access to the black market instead of the government. I strongly believe that the sectors of the black market t