Question

Write the measures to control black market

Answer 1

Black markets can be taxed by construction. This would have been virtually impossible before the internet era, but today it’d be pretty easy. Suppose, for example, that we had a 100% national sales tax (NST.) And that every dollar of after tax income came with a dollar of NST credit. The net effect would be a 50% tax on black markets and unreported income and nothing else.

Answer 2

There’s two forms of black market:

Fixing price over supply-demand equilibrium (ex: minimum wage above supply-demand equilibrium leading to unreported transactions for work performed below minimum wage)

Fixing price under supply-demand equilibrium (ex: tickets at venue sold under value to be more “affordable” to fans, ticket resellers purchase and hike prices and resell/scalp for higher than original cost)

The common element to all black markets is over-regulation, whether that’s a ban, price fixing, or other forms of restriction. A black market doesn’t exist if it’s:

1. Legal, and

2. Price-equalized to supply and demand
Trying to “control” the black market with more regulations never works, although it can reduce market share considerably. It’s why even China and North Korea have a thriving black market in even the most oppressive of regulation structures.

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