Meditations and Learnings

Meditations and Learnings

How Price Controls Create a Black Market

Price controls do not change demand, only the practicalities in acquiring the product. The prices of items on the black market will be higher. The increase is mostly due to the incurred risk of selling product illegally. Suppliers usually sell the item off the record if it is illegal to sell at the profitable price.
The continued legal distribution of a product under artificially low prices set by the government often requires compromise. Otherwise, it is not economically viable to produce. Customers who don’t want to accept this will obtain the product via a black market.