Question

What purpose do parallel markets and black markets serve? Provide examples of their operations and their...

What purpose do parallel markets and black markets serve? Provide examples of their operations and their function.

Homework Answers

Answer #1

Black markets and parallel markets operate as a separate market from the national market structure. These exists when the economy is controlled, restricted and when a country has less control over its economy. In some countries in order to avoid higher price and regulations black market exists as a parallel market.

In Iran, the official rate would be available only for essential like food and medicine which was trading at higher rates in the black market because of restrictions.  

In Venezuela because of inflation and unstable foreign exchange reserves, the Venezuela currency lost its value in black market

In US, drug dealing is an example of black market which operates in under the demise of government control

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