Strategic Interactions on Networks – Black Markets
Black markets are large networks, just like networks in normal markets. However, there are interesting differences. Thinking about black markets without applying knowledge of networks, the first thing you think of is that black markets are more secretive, selective, and have high prices. Also, in order to a black market to be successful, there has to have a sufficient amount of buyers and sellers, which means that there must be an ample number of people that knows about this black market, but not law enforcements.
Translating that and applying our networks knowledge, what does being secretive and selective do to the map? It means that there’s probably a lot of “one-way-streak” connections, such as in the image below.
A can contact B, C, D, and E, but they cannot contact A. Expanding (in our heads), the network is large, and there is one node (the main organized/person in charge, supposedly) that would a small number of two way connections, and then a few layers of nodes down is when the network starts growing. In a secret black market the buyers deal with low level sellers/connectors that have access to the goods. This keeps the identity of people who are higher ranks within this black market organization secret in case a transaction is caught by the law enforcements.
An inference can be made that these ties are much stronger than say a tie between a customer and Amazon because of the selectivity of members within this network and how successful black markets have been in evading law enforcements.
Source: http://web.pdx.edu/~kinsella/offprints/csp06.offprint.pdf