EclectEcon The Emergence of Black Markets When Products are Banned

When authorities ban a product, even if it is for our own good, some of us will gladly pay a big premium to get the product. We see it all the time.

One of the latest examples comes from Winnipeg [h/t to Brian Ferguson]:

Students at a Winnipeg high school boast on a Facebook site they're running 'black-market' operations out of their lockers — selling pop, chips and chocolate bars banned for sale on school property under Winnipeg School Division's tough nutrition policy....

The division adopted the recommendations of a 2005 provincial task force by
banning junk food in favour of salads and wraps in cafeterias, and allowing
only healthy snacks and drinks in vending machines. The policy is aimed at
reducing obesity and related health problems.

I may be asked to mail in my Libertarian credentials for saying this, but I think the school authorities are doing the right thing. And if I were a parent of students in that school system, I would hope that someone would begin to monitor the Facebook postings and crack down on the black market dealings.

But personal views aside, this example is just further evidence that when products are banned, black markets emerge very quickly. After all, people respond to incentives.

(link)

Gabriel (www):

If the school is private, your libertarian decoder ring is safe. "Let a thousand flowers bloom" and so on.

If the school is public, it has far greater problem than cafeteria food.

Now, just because the State is paying for my education, it doesn't follow that it's entitled to tell me what to eat (or tell my parents what to feed me).

I saw this documentary from the UK, about this busy-body chef that would campaign to get (public) schools in Britain on a fast-track to nutritional fascism... And the backlash was that mothers would smuggle McDonalds into schools, for their kids.

Regulation is poor substitute for virtue, in most cases.

9.22.2007 2:58am

Sudha Shenoy (mail):

Trade in these goods already existed &flourished. Authorities then forbade people to do what they had already been doing. People then contd. The only difference: previously, authorities took no notice. Now, officials had ordered people to stop. Look at the old Soviet Union. Virtually all private exchange was forbidden.

9.23.2007 2:01am

EclectEcon (mail) (www):

Are there no stores near that school? When I was in HS many years ago, the only beverages available were milk and water, and we never imagined being able to buy chips/crisps or chocolate or candy at the school. But there was a store right across the street where we could buy all the junk we wanted.

And in grade school there were several such stores on our way to and from school, in addition to one across the street from the school.

So why the need for a black market to develop in the first place?

9.23.2007 2:37am

EclectEcon

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