A black market, underground economy, or shadow economy is a clandestine market or series of transactions that has some aspect of illegality or is characterized by noncompliance with an institutional set of rules. If the rule defines the set of goods and services whose production and distribution is prohibited by law, non-compliance with the rule constitutes a black market trade since the transaction itself is illegal. Parties engaging in the production or distribution of prohibited goods and services are members of the [clarification needed]. Examples include the illegal drug trade, prostitution (where prohibited), illegal currency transactions, and human trafficking. Violations of the tax code involving income tax evasion [clarification needed] in the [clarification needed].
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Because tax evasion or participation in a black market activity is illegal, participants attempt to hide their behavior from the government or regulatory authority. Cash is the preferred medium of exchange in illegal transactions since cash transactions are less-easily traced. Common motives for operating in black markets are to trade contraband, avoid taxes and regulations, or skirt price controls or rationing. Typically the totality of such activity is referred to with the definite article, e.g. "the black market in bush meat".
The black market is distinct from the grey market, in which commodities are distributed through channels that, while legal, are unofficial, unauthorized, or unintended by the original manufacturer, and the white market, in which trade is legal and official.
Black money is the proceeds of an illegal transaction, on which income and other taxes have not been paid, and which can only be legitimised by some form of money laundering. Because of the clandestine nature of the black economy it is not possible to determine its size and scope.