Most Operating Black Markets are analyzed to be developed during the war time. When a country is engaged in a war, government puts some restrictions on the general public use of critical resources to support the warriors of the nations. This is generally done through the way of rationing. The black marketers take the advantage of the situation and make available these products at exorbitant prices to the customers. This can very well relate with the incidence of Britain. During the World War II, the supplies, only, for the USA army base in Britain, was leaked and made available to the natives of Britain by the black market correspondents.
‘Black markets emerge when there are price distortions’ says Ragui Assaad, Professor of Public Affairs at the University of Minnesota. Black market gets develop when there is scope for price distortion in the economy. Existence of various subsidies provides basis for such distortion. Black Marketier exploits the subsidies provided by the government to their advantage. As said by El-Diwany, “When you have such subsidized goods, the market always wins”.
In other words, when a subsidy is provided on the energy resource say fuel, the gasoline station are supposed to sell them at fixed price but there is huge difference in the market price and fix price. Through this they make huge profits .Subsidized fuel is smuggled to through the boundaries of the other nation and sold at profitable prices.
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