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Online Black-Markets: An Investigation of a Digital Infrastructure in the Dark

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• Published: 21 September 2021
• Volume 24 , pages 1811–1826, ( 2022 )

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• Paolo Spagnoletti   ORCID: orcid.org/0000-0003-1950-368X 1 ,
• Federica Ceci 2 &
• Bendik Bygstad 3  

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This paper investigates the functioning of Online Black-Markets (OBMs), i.e. a digital infrastructure operating in the Dark Net that enables the exchange of illegal goods such as drugs, weapons and fake digital identities. OBMs exist notwithstanding adverse conditions such as police interventions, scams and market breakdowns. Relying on a longitudinal case study, we focus on the dynamics of interactions among actors and marketplace technologies and we identify three mechanisms explaining OBMs operations. In particular, we show that OBMs infrastructure is the result of commoditization, platformization and resilience processes. Our contribution relies on the identification of community-based mechanisms that generate the OBMs infrastructure, extending the current understanding of e-commerce and social commerce.

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1 Introduction

In October 2013 the FBI closed down Silk Road , the first online illegal marketplace, which served around 100.000 customers, primarily buying illegal drugs. In a much-publicised trial, the founder received a life sentence, and the US Government has later seized more than 1 bn worth of bitcoin (The Guardian, Nov 6th, 2020). However, Silk Road seizure and the arrest of its admin did not stop buyers and vendors: clone marketplaces appeared few weeks later and several new, more technically robust, marketplaces opened in the Dark Net in the subsequent months (Aldridge & Décary-Hétu, 2016 ). In the period from October 2013 until April 2018, we registered the existence of 122 illegal marketplaces. In January 2021 German police closed down the DarkMarket marketplace , with 2.400 sellers of drugs, stolen credit card data, and malware , which was reported to serve half a million users (The Guardian Jan 12th 2021). How are these on-going illegal activities possible, in a world characterized by Internet surveillance (Samtani, Chinn, Chen, & Nunamaker, 2017 ; Zuboff, 2015 )?

The answer relies in the existence of the Dark Net, that are layers of the Internet that guarantee the anonymity of online interactions (Chaudhry, 2017 ; Li & Whinston, 2020 ). The Dark Net can be accessed only with specific software such as the Tor browser; web pages in the Dark Net are not indexed by search engines and access to hidden services cannot be traced (Chertoff, 2017 ). Within the Dark Net, an infrastructure of tools and services for electronic commerce emerged: the Online Black-Markets (OBMs). OBMs consist of computing and network resources (i.e. cryptocurrencies, the Tor network) that connect buyers and vendors interested in exchanging specific goods, mainly illegal products and services. Coordination and transactions in OBMs are supported by Online Marketplaces (OMs) similar to those enabling legitimate e-commerce and social commerce. Today, the OBMs infrastructure is a global scale phenomenon: one study reported a volume of $220 million in transactions on a single marketplace (Soska & Christin, 2015 ), while more recent studies estimate over $790 million (Chainanalysis, 2020 ). OBMs operate in absence of formal rules, legal protection, social legitimacy and despite conflicting goals among actors. In fact, a variety of actors interacts in OBMs: marketplace users and admins, hackers, software developers, and law enforcement agents (Beckert & Wehinger, 2013 ; Décary-Hétu & Giommoni, 2017 ; Lacson & Jones, 2016 ; Paquet-Clouston, Décary-Hétu, & Morselli, 2018 ; Van Buskirk et al., 2017 ).

From a research point of view, OBMs represent a unique setting due to unobservability of its technological and human components, heterogeneous and adverse forces influencing infrastructural growth, presence of unknown actors with conflicting goals, and a negative global impact of its social outcomes. We investigate the phenomenon of OBMs using the theoretical lens of digital infrastructure. In line with the definition provided by Constantinides, Henfridsson and Parker ( 2018 ), a digital infrastructure is composed by “ computing and network resources that allow multiple stakeholders to orchestrate their service and content needs ” (Constantinides et al., 2018 ). The OBMs digital infrastructure generates websites, marketplaces, online forums, security technologies and other means supporting complex sociotechnical interactions for illegal purposes (Huang, Siegel, & Madnick, 2018 ; Li & Whinston, 2020 ). The dynamics of such tightly coupled interactions are generated by underlying mechanisms that are not always observable and therefore partially unknown.

In this study we document the functioning of OBMs, and we investigate the underlying forces and mechanisms explaining the existence of the OBMs infrastructure despite law enforcement efforts. In doing so, we focus on the generative dynamics of tightly coupled interactions among actors and their supporting computing and network resources. The misalignment of actors’ goals may challenge the development and adoption of the most appropriate anonymity tools and their enabling technologies. When goals are in conflict, the self-interest of actors may represent a threat for infrastructure operations. In line with this reasoning, we aim to answer the following research question: what are the generative mechanisms of the Online Black-Markets infrastructure?

From a methodological point of view, we conduct a longitudinal case study focusing on the evolution of technologies and social practices. Our research approach is a critical realist case study (Wynn & Williams, 2012 ), chosen for two reasons. First, the OBMs phenomenon calls for an interdisciplinary and multi-level conceptualization of the OBMs, requiring a multi-method research design, which is well supported within critical realism (Dobson, 2001 ; Mingers, 2001 ). Second, with the present work we aim to move our understanding far beyond a scattered and anecdotical view of OBMs and aim at revealing the underlying mechanisms that shape this special form of digital infrastructure over time (Wynn & Williams, 2012 ). We build our dataset by triangulating archival data from secondary sources (e.g. public reports; scientific papers; websites; press documents) with primary data obtained from interviews with Law Enforcement Agency (LEA) agents, and analyses of illegal offerings. Our analysis reveals three causal mechanisms operating in the OBMs infrastructure: commoditization, platformization and resilience. Our contribution is that the OBMs infrastructure is generated by three interacting mechanisms; they show that the technical and social elements not only interact to facilitate transactions, rather they constitute OBMs, feeding on each other. Moreover, we shed light on the infrastructural mechanisms supporting OBMs operations and discuss the implications for e-commerce and social commerce.

The paper is structured as follows. First, we review the literature on OMs and OBMs. Next, we frame the OBMs as a digital infrastructure. The research method is illustrated in section 4. Our empirical findings are then presented to introduce the mechanisms explaining the OBMs operations. A discussion section closes the paper by drawing conclusions about both theoretical and practical contributions.

2 Background Literature

We draw on existing IS research to introduce the main features of OMs and review the primary factors influencing the performances of OMs. We then focus on social, technological and value-creating mechanisms explaining the functioning of OMs. Finally, we review the literature on OBMs to compare their mechanisms with OMs and evaluate how OBMs operate despite the adverse institutional conditions.

2.1 Online Marketplaces

Online marketplaces are intermediation structures that facilitate transactions through online media. OMs provide functions to aggregate and match suppliers and customers, enhance trust, and share market information (O’Reilly & Finnegan, 2010 ). OMs also provide value-added communication, brokerage and integration services for buyers and sellers by supporting basic market functions, meeting management needs for information and process support, and operating the IT infrastructure (ibid, p. 463). The increased popularity of social media has extended the scope of OMs and added new collaborative and user-centered functions, leading to the rise of social commerce (Huang & Benyoucef, 2013 ). In social commerce, the delivery of e-commerce activities and transactions is influenced by community interactions such as, for instance, the rating and recommendations issued by users on goods and vendors (Liang & Turban, 2011 ). Therefore, we can conclude that OMs are socio-technical structures that facilitate coordination and transactions among buyers and sellers through online media.

To succeed in the market, OMs must continuously update and improve their structures and leverage strategic, institutional and social factors. Marketplace administrators must choose appropriate governance structures, service provision strategies, organizational capabilities and strategic manipulation of OM operations (Wang, Zheng, Xu, Li, & Meng, 2008 ). For instance, product offerings can be expanded with innovative products to positively impact volumes traded and enhance revenues. Moreover, service provision strategies must be adapted to product characteristics such as in the case of auctions and electronic catalogues that fit with commodities whereas supply chain services are more suitable for bespoke products (Hopkins & Kehoe, 2006 ). Another example is technology arrangements like shared databases and IT systems for routing orders between trading partners that improve OM performances through timely information sharing and reduced transaction processing costs (Wang & Archer, 2004 ).

Institutional and social factors also influence the performance of OMs. Trust plays an important role among these factors, since it enables shared expectations between unknown social actors who have no experience of previous interactions (McKnight, Choudhury, & Kacmar, 2002 ). Therefore, OMs must ensure that transactions are securely completed and that both parties to the transaction, buyers and sellers, do not partake in opportunistic behaviors (Pavlou & Gefen, 2004 ). Online buyer behavior is shaped by the beliefs that a marketplace will institute and enforce rules and procedures to mitigate the risk of opportunistic behaviors (Pavlou & Gefen, 2004 ). Various forms of institutional mechanisms have been implemented by OMs, including escrow services, credit card guarantees and privacy protections that often require the involvement of authorities and third parties to generate proper transactional conditions (Lu, Zeng, & Fan, 2016 ). When such mechanisms are in place, buyers can trust the marketplace administrator, the community of sellers and the local e-commerce environment (Kim & Ahn, 2007 ; Lu et al., 2016 ; Pavlou & Gefen, 2004 ).

The success of OMs is also contingent on the level of participation and use of OMs’ functions. In addition to institution-based trust, online purchase intentions are influenced by the perceived social presence of a marketplace and the perceived social presence of others (Lu et al., 2016 ). For instance, when unanticipated market shocks reduce the number and types of traders utilizing OMs the lack of participation hinders OM performances (O’Reilly & Finnegan, 2010 ; Wang et al., 2008 ).

OMs leverage the value-creating mechanisms of other digital platforms (de Reuver, Sørensen, & Basole, 2017 ; Ghazawneh & Henfridsson, 2015 ; Hein et al., 2020 ; Spagnoletti, Resca, & Lee, 2015 ). These value-creating mechanisms build on the efficient facilitation of transactions (Tiwana, 2014 ) and the provision of features enabling innovation (Yoo, Henfridsson, & Lyytinen, 2010 ). OMs act as intermediaries by directly matching supply to demand and suggesting possible transactions or by providing easy-to-use search functions through which users can find transaction partners. Via the orchestration of transactions, digital platforms create two-sided markets (Armstrong, 2006 ) that leverage cross-side network effects. The basis for this value-creating mechanism is a modular software-based platform, where the platform owner provides value-creating services, such as payment functionalities or recommender systems to increase the efficiency and convenience of the services for the ecosystem (Hein et al., 2020 ).

2.2 Online Black-Markets

Online Black-Markets (OBMs), also referred to as darknet marketplaces or cryptomarkets in the literature (Aldridge & Décary-Hétu, 2016 ; Bhaskar, Linacre, & Machin, 2017 ; Chaudhry, 2017 ), are a sociotechnical structure of systems, people and organizations. OBMs are composed by anonymous marketplaces that connect buyers and vendors interested in the exchange of illegal products and services through the use of technologies (i.e. cryptocurrencies, the Tor network and other anonymizing services), developed by communities that design, implement, maintain and adopt its functionalities. The OBMs operations are contrasted by severe adverse conditions, such as absence of formal rules, law enforcement control, legal protection, social legitimacy (Beckert & Wehinger, 2013 ; Décary-Hétu & Giommoni, 2017 ; Lacson & Jones, 2016 ; Paquet-Clouston et al., 2018 ; Van Buskirk et al., 2017 ). Moreover, OBMs are characterized by conflicting goals among actors that undermine their functioning, namely police operations, attack of hackers and opportunistic behaviour of marketplace administrators or vendors (Bhaskar et al., 2017 ; Soska & Christin, 2015 ). However, such shocks do not affect the existence of OBMs (Décary-Hétu & Giommoni, 2017 ).

The research on OBMs related phenomena is limited, but relevant for our study. One reason for the scarcity of research is the challenge of accessing the empirical field (Victor Benjamin, Valacich, & Chen, 2019 ). Another is that the conceptualization of the domain has not yet stabilized, and current studies either focus on online illegal behaviors or on tools supporting fraudulent interactions rather than developing a holistic understanding of the OBM as a complex socio-technical phenomenon.

Previous research can be grouped into three streams as illustrated in Table 1 . A first stream of literature is focused on the interactions of actors performing illegal activities on OBMs. Drugs, malware and stolen data are examples of goods exchanged in forums and online marketplaces (Odabas, Holt, & Breiger, 2017 ; Samtani et al., 2017 ; Soska & Christin, 2015 ). These studies issue recommendations for policymakers in specific domains such as cyber-intelligence and cyber-defense. Despite their practitioner orientation, most of these works draw on rigorous empirical analysis based on methods and techniques to analyze data collected through web-crawling (i.e. the use of software agents that systematically browse the internet to download and index specific content) and nonobtrusive netnographic observations (Bhaskar et al., 2017 ; Christin, 2012 ). For the purposes of this study, we refer to this stream as a valuable source of secondary data.

A second stream of research focuses on technologies and tools used for communication and trade among anonymous members of the OBMs communities. In particular, online meeting places such as forums and Internet Relay Chat (IRC) are analyzed to show how these artifacts support user participation (Benjamin, Zhang, Nunamaker, & Chen, 2016 ; Leukfeldt, Kleemans, & Stol, 2017 ). As for the trade, OBMs host many marketplaces, whose functions include product listings, ratings, wallets and escrow services. The security of transactions is guaranteed by public key infrastructures and decentralized systems such as cryptocurrencies (Me, Spagnoletti, & Pesticcio, 2017 ). Moreover, such marketplaces have replaced many online forums supporting anonymous interactions between buyers and sellers of illegal goods. The aim of these studies is to explore the ways in which marketplaces operate (Van Hout & Bingham, 2014 ). Criminal case studies, netnographic observations and, in some cases interviews with buyers and vendors, have been conducted to explain how marketplace functions enable users to interact online.

A third stream analyses value-creation in OBMs. These studies use managerial concepts such as value chains and transaction costs to investigate business models in criminal networks (Bakken, Moeller, & Sandberg, 2017 ; K. Huang et al., 2018 ; Kraemer-Mbula, Tang, & Rush, 2013 ; van Wegberg et al., 2018 ). The main contribution of these studies is to shed light on commonalities and differences between online and conventional black markets and to explain recent trends such as the commoditization of criminal services. Some studies investigate the relationship between OBMs technologies and their social organization. Their focus has been mostly concentrated on functioning and operations over limited time spans.

OBMs experience multiple and frequent disruptions. Technical failure of hidden services may be either injected by police agents engaged in law enforcement operations or may be caused by hackers and internal scammers. Notwithstanding these failures, the OBMs infrastructure has shown exceptional capabilities to react and persist over time. Only a few studies have investigated the effects of disruptions and adverse forces on OBMs mostly focusing on their criminological implications (Décary-Hétu & Giommoni, 2017 ; Lacson & Jones, 2016 ; Van Buskirk et al., 2017 ). More effort is needed to theorize on the processes through which OBMs operate despite the absence of favorable institutional conditions.

2.3 Generativity in OBMs Infrastructures

Digital infrastructure, also called information infrastructure or cyberinfrastructure, is a term which encompasses a socio-technical interconnected structure of systems, people and organizations (Henfridsson & Bygstad, 2013 ). The extant literature on digital infrastructures has researched the phenomenon in several contexts, such as the development of the Internet (Hanseth & Lyytinen, 2010 ), mobile platforms (Eaton, Elaluf-Calderwood, Sørensen, & Yoo, 2015 ), websites and services for electronic commerce (Hanseth & Monteiro, 1997 ).

Digital infrastructures may be regarded as an organizational phenomenon; they include not only the technical solutions, but also the organizations and people who leverage the services (Braa, Hanseth, Heywood, Mohammed, & Shaw, 2007 ; Henfridsson & Bygstad, 2013 ; Tilson, Lyytinen, & Sorensen, 2010 ; Vaast & Walsham, 2009 ). An infrastructure is the result of a process by which multiple human actors translate and inscribe their interests and needs into a technology, creating an evolving network of human and nonhuman elements such as technologies, processes, standards (Aanestad & Jensen, 2011 ; Constantinides & Barrett, 2014 ; Hanseth & Monteiro, 1997 ; Yoo, Lyytinen, & Yang, 2005 ). Digital infrastructure and their architecture fuels platforms, websites and other artifacts, that exists within them thanks to the layered and modular nature of such complex systems (Constantinides et al., 2018 ; Yoo, Henfridsson, & Lyytinen, 2010).

The literature has highlighted some key attributes: (i) digital infrastructures are different from traditional information systems; they are heterogeneous, often with no dominant actor (Hanseth and Lyytinen 2010 ); (ii) the dynamics of digital infrastructures are also different in that they are not designed, since it has been proven that they evolve through innovation, adoption and scaling (Henfridsson & Bygstad, 2013 ); (iii) innovation is characterized by nonlinear evolutionary dynamics, it is hard to predict, and it is the result of the interrelations among a variety of actors (Bygstad, 2010 ).

Digital infrastructures evolve over time as a result of the generative processes that shape the evolution of such complex socio-technical artifacts (Henfridsson & Bygstad, 2013 ). Generativity is defined as the capacity to make difficult jobs easier, to offer additional kinds of uses, to easily use and access the technology (Zittrain, 2006 ). The notion of generativity has been introduced to explain innovation, rapid scaling and adaptation in digital infrastructures (Henfridsson & Bygstad, 2013 ; Huang, Henfridsson, Liu, & Newell, 2017 ). Generativity does not take place only in collaborative and favorable environments. As complex systems, digital infrastructures are exposed to major breakdowns determined by the propagation of local failures into large-scale disruptions (Hanseth & Ciborra, 2007 ). When digital infrastructures operate under adverse conditions, such as for instance in case of cyberattacks, generative processes are triggered to react to disruptions and breakdowns. Though longevity and durability are inherent properties of digital infrastructures (Tilson et al., 2010 ), the generative process and the underlying mechanisms through which they are achieved has been overlooked.

The OBMs phenomenon is characterized by a rich and complex set of elements. The technologies adopted are used for both illegal and law enforcement purposes: the same tools are used by communities of criminals, hackers and police agents making the boundaries of the phenomenon blurred. This makes the case study a suitable approach to investigate OBMs (Yin, 2018 ). We conducted a longitudinal case study: the longitudinal approach allowed us to conduct a process analysis (Berends & Deken, 2019 ) of how events unfolded over time and investigate the mechanisms explaining the infrastructure operations.

3.1 Data Collection

The empirical context is represented by the digital infrastructures of OBMs, intended as the assemblage of technologies, actors and practices. We collected data from multiple sources; due to the characteristics of anonymity and secrecy of the analyzed markets and users, data triangulation and mixed method are more important than usual since one single source cannot give a reliable picture of the phenomenon (Ferguson, 2017 ). We adopted a mixed-method triangulation (Downward & Mearman, 2007 ), and we collected data referring to a period from 2012 to mid-2018. The aim behind the data collection was to obtain a full understanding of (i) events, (ii) actors, and (iii) technologies, as discussed below.

Regarding the events which occurred in the OBMs infrastructures, information has been obtained consulting reports from the police operations (e.g. EUROPOL), conducting open-ended interviews with police officers specialized in cybercrime and with representatives of governmental institutions such as the Council of Europe (details available upon request). Moreover, we also analyzed open sources of data on the Internet, i.e. historical data obtained accessing online forums, blogs, specialized webpages and public databases, that have been integrated with data reported in previous research papers.

Concerning the actors, we identified the following: hackers, site administrators, buyers, vendors and LEA’s agents. To investigate their characteristics, we collected data from hidden websites and police reports. Additional data on technological and behavioral trends have been collected by surveying a group of 32 experts working in forensics labs, criminal intelligence services, LEA’s cybercrime units and government Computer Security Incident Response Teams (CSIRT) from 20 separate EU countries attending a CEPOL course on cybercrime.

Finally, we investigated the technologies, i.e. the technological functions implemented to guarantee security and anonymity of transactions. Their diffusion and adoption have been traced and documented, integrating direct observation and historical data coming from secondary sources such as articles and posts published on websites, blogs, trade journals, newspapers, and online forums such as Reddit, often accessed thanks to the services of the Internet Archive (IA) website. We also collected technical information using scientific papers from the specialized literature (Horton-Eddison & Cristofaro, 2017 ). An overview of data collection strategy is shown in Table 2 .

3.2 Data Analysis

We conducted a critical realist analysis, building on the method described by Bygstad, Munkvold and Volkoff ( 2016) . The process is summarized in Table 3 and described as follows.

Step 1 regards the description of disruptions that constitute the phenomenon of interest. Typical disruptions in the OBMs are, for instance, closure of a hidden site (e.g. Silk Road seized by FBI in 2012), diffusion of a new untraceable method of payment (e.g. the establishment of Bitcoin tumblers in 2011), emergence of a new business model for online commerce of illegal products (e.g. emergence of P2P markets such as Open Bazaar in 2016). Some events were well established in secondary sources, while other emerged from interviews with key informants. This procedure helped us establish a timeline of key events that occurred over time (see Fig.  1 ).

Timeline of events

In the second step we identified the key entities (actors and objects) associated with the event (Volkoff, Strong, & Elmes, 2007 ). Key actors identified include hackers, vendors and buyers, site owners and admins and LEA agents. As objects, we refer to the technologies used in OBMs. Sections 5.1 and 5.2 report a description. In step 3, we analyzed the material to generalize in abstract terms the nature of the phenomenon and we conceptualized it using the digital infrastructure theoretical lenses, discussed in section 3.

The following steps 4–6 were conducted iteratively over a period of several months. Step 4 is retroduction and it consists of the exploration of various candidate mechanisms that could explain the observed outcomes. Following Hedström & Swedberg ( 1996 ), we looked for three types of mechanisms: how structure influences action (macro-to-micro), how action triggers action (micro-to-micro), and finally how action reproduces or changes structure (micro-to-macro).

The fifth step regards the analysis of mechanisms. In this phase we identified the candidate mechanisms and their relational entities, departing from the observed outcomes previously identified. Then, we worked to develop an explanation of the causal process based on interaction and dependency among interrelated entities and ensuing observable outcomes. Finally, we identified and documented three causal mechanisms that best explain the full breadth of observed events. The three identified mechanisms are: commoditization, platformization and resilience. A full description is offered in section 6.

The sixth and last step focuses on the assessment of explanatory power of the identified mechanisms. We treated the proposed mechanisms as a candidate explanation of digital infrastructure persistence, and we evaluated them against the empirical evidence. Finally, within our research team, we identified alternative mechanisms and we assessed them against our empirical evidences. These could explain some of the observed outcomes, but on their own were not satisfactory. The result of this analysis was that although several mechanisms were at work, only the three mechanisms described in section 6 were consistent with all the data.

4 Empirical Evidences

The OBMs digital infrastructure is a socio-technical system consisting of technologies, organizations and actors. What distinguishes it from other infrastructures is the continuous challenges posed to his existence given by the presence of adverse conditions such as absence of formal rules, law enforcement control, legal protection, social legitimacy and conflicting goals among actors. This translates in the development of appropriate means to ensure users’ anonymity and in a highly dynamic and continuously changing nature. A number of significant events express such dynamism: growth of marketplaces, law enforcement interventions, changes in technologies for exchanging goods. In the remainder of the section, we present an overview of the technologies that enabled OBMs establishment as well as a review of the functioning of OBMs and the more important events. While discussing the evidence, we will refer to the topics identified in Table 2 using the code reported in the third column (e.g. code I2 when referring to interviews with experts).

4.1 Anonymity Tools and Enabling Technologies

Since its inception, the Internet has provided users with an infrastructure enabling different forms of interactions. Group communications, private messages and file sharing are fundamental functions provided by many tools with different levels of sophistication. Online communities whose members are concerned with anonymity have different options to interact without disclosing their real identity. In addition to the possibility of accessing the web with a Tor browser (i.e. a free and open-source software that enable anonymous communication and web browsing), the use of aliases and the establishment of private spaces for social interaction are common practices for OBMs users (source T3 in Table 2 ). Protocols and systems for distributed discussion system and online messaging created in the early 90’s’ such as the IRC and USENET (the bulletin board system) are still in use by hackers and criminals to exchange private messages (source T2 in Table 2 ). These tools are used in combination with web forums and blogs. An example is Reddit.com , a popular social news aggregator, established in 2005, which also hosted from 2010 until 2018 a subcommunity of approximately 20,000 members focused around OBMs related matters.

Since the Internet has no inherent cryptographic security, to ensure the secrecy of data exchange different solutions have been developed over time. These tools have been widely adopted in OBMs communications. For instance, Pretty Good Privacy (PGP) is a tool developed by political activists in the 90s and used today by Internet users including criminals for signing and encrypting all sort of data such as texts, email, files and directories (source I2 in Table 2 ). Encryption is also a key component of distributed ledger technologies (i.e. blockchain), the revolutionary solution for transaction processing. The most impactful blockchain application is the development of cryptocurrencies, such as the Bitcoin. After its launch in 2009, Bitcoin replaced previous payment systems used by criminals (Böhme, Christin, Edelman, & Moore, 2015 ). More recent developments of e-payment systems obfuscate the sender and the recipient of cryptocurrency transactions by tumbling wallets (i.e. shuffling a bundle of transactions together to disguise the origin of the funds. Examples of tumbling wallets are Dark Wallet, Bitcoin Fog) and include advanced cryptographic functions (e.g. Zcash) (source T2 in Table 2 ). The OBMs infrastructure is the result of a combination of the above-mentioned anonymity tools, developed and integrated to respond to emerging needs of the OBMs community.

4.2 The Establishment and Evolution of OBMs Marketplaces

The first OBMs marketplace was SilkRoad, established in January 2011 and active for 33 months (source T2 in Table 2 ). SilkRoad was the first market established in the Tor network organized as an e-commerce platform. SilkRoad served mainstream clients with an anonymous, accessible method for purchasing illegal goods. Taking advantage of the anonymity guaranteed by the Tor infrastructure, it allowed the exchange of illegal goods and paved the road for further development of online crime (source T1 in Table 2 ). The success of Silk Road has shaped the structure of OBMs marketplaces: they are organized in two sided platforms and provide escrow functions similar to those available in conventional e-commerce websites. Payments are performed using cryptocurrencies and vendors use PGP keys for building their reputation while remaining anonymous. The typical offer includes picture to display the good, customer rankings of the vendor, payment system accepted, and escrow mechanism for secure exchange. We show in Fig. 2 a page from an OBM marketplace displaying the offering of a stolen credit card. As can be noted, the site mimics the logic of legitimate e-commerce sites, with product description, shipping information and payment systems.

An example of offer taken from source C1 in Table 2

The trade of illegal goods is conducted through anonymous transactions and shipping. To build trust between vendors and buyers, buyers are called to rate the vendors. In OBMs marketplace, building trust is central, as we can see from the buyer’s guidelines reported on Dream Market: “First of all, all members are kindly asked to be honest regarding package, delivery, product quality and shipping conditions. This helps maintaining a trusted network, which is a major basis in hidden web marketplaces. Scammers are not tolerated and are quickly identified as such” ( http://xsuee6v24g2q6phb.onion/ help accessed on Dec 03, 2018 - source C1 in Table 2 ). Payment is usually performed through the use of escrow services; i.e. the marketplace admin withhold the payment until the buyer confirms the receipt of the goods. In our data, most of the shipping was done by regular mail (source C1 in Table 2 ).

After the seizure of Silk Road, in the period from October 2013 until April 2018, we registered the existence of 122 marketplaces. During this period, 9 have been closed by LEAs and 42 have been closed by admins with an exit scam (sources T1 and T4 in Table 2 ). An exit scam occurs when an established business stops shipping orders while continuing to receive payments for new orders. Figure 3 reports the number of active marketplaces on Tor per months and 5 significant key events discussed below.

OBMs on Tor (2013–2018)

Seizure of Silk Road: Silk Road was seized by the FBI in October 2013. The FBI arrested founder and administrator of the site and seized $32 million in BTC from accounts related to Silk Road. By the time Silk Road was closed, there were 6 active marketplaces, where many vendors were already active. Vendors did not stop their business: buyers were able to verify that they were dealing with the same vendors by using the same PGP or other encrypted signatures and this facilitated the migration of users among marketplaces. Reputation of vendors remained untouched and trust in the infrastructure was not lost.

Exit scam performed by SheepMarket: in November 2013 the administrator of SheepMarket, a marketplace operating since February 2013, performed an exit scam stealing $6 million in BTC. Exit scams are common in OBMs. The SheepMarket exit scam, however, is relevant for our analysis because of the reaction of the OBMs community of vendors and buyers. In fact, collaborating and exchanging information through online forums and using investigation techniques (e.g. tracing BTC in a tumbling service), the OBMs community managed to discover the identity behind the pseudonym of the scammer and made it publicly available in the net. The pursuit of the administrator was the result of the collaboration of the whole community, that generated a creative and collective solution to increase trust and reliability of the infrastructure, as this post from Reddit.com shows: “ If you don’t want me to pursue this thief then I won’t. To whoever wants to continue my work here it is. If this helped anyone feel free to donate” (posted on Reddit.com/SheepMarket on Dec 2013). In March 2015, the SheepMarket administrator was arrested (sources T1 and T3 in Table 2 ).

Operation Onymous : Operation Onymous is an international law enforcement operation conducted in October 2014 that shut down a number of websites, including 7 marketplaces. The operation required international collaboration among LEAs from 17 countries. Similar to previous cases, after the closure, users migrated to alternative platforms. In fact, despite scams and law enforcement efforts, OBMs continue to proliferate (sources I1, T1 and T3 in Table 2 ).

Exit scam performed by Evolution : in March 2015, the Evolution marketplace was closed down by the admin that performed an exit scam: the admin took all the money contained in the escrow, an estimated amount of $12 million in BTC. Moreover, the Evolution scam created a major discontinuity since at that time it was the 2nd largest marketplace. After this exit scam, we observe a peak of new marketplaces. Many smaller markets emerged to take advantage of the turbulence generated by the event (sources T1 and T2 in Table 2 ).

Operation Bayonet: it is an international LEA operation targeting two of the biggest marketplace active in June 2017: AlphaBay and Hansa. At the time of the seizure, AlphaBay was the largest marketplace, with over 369,000 listings and 400,000 users. After the closure of AlphaBay, Hansa was projected to become one of the leading markets. However, on July 20th 2017 it was revealed that Hansa had been compromised by LEAs for several weeks before closing, shortly after AlphaBay’s seizure. Dutch police impersonated the site’s administrators, collecting usernames, passwords and addresses of Hansa buyers. After AlphaBay’s closure, the police allowed the Hansa user base (growing from 1000 to 8000 vendors per day, due to the AlphaBay shutdown) to make illegal transactions in order to collect evidence for future prosecution of users, as the Dutch Police declared on the list of FAQ they published on the Hansa webpage after seizure: “ Question: Why have you done this? Answer: Hansa Market was a darknet market that was primarily used to sell illicit goods. We have chosen to take over this site to collect as much information as possible on its users. Furthermore, we want to send a clear message that using darknet markets is not an anonymous activity.” (retrieved from http://politiepcvh42eav.onion/hansafaq.html accessed September 07, 2017). After Operation Bayonet, we observe a reduction of active marketplaces to 10 (sources I1, I3 and T1 in Table 2 ).

After this event, there was a year of relative stability in the number of active marketplaces. Interviews with LEA operators and analysis of secondary data suggest that platform-like marketplaces are facing maturity and a new form of illegal marketplaces, the P2P commerce, was proliferating (source I2 in Table 2 ). P2P commerce, also called decentralized market, is an alternative form of trade illegal goods. Although not entirely new, decentralized markets are assuming new relevance since the launch in April 2016 of OpenBazaar (Chainanalysis, 2020 ). OpenBazaar is an e-commerce website that hosts a fully decentralized marketplace eliminating administrators in the markets. It is claimed that similar marketplaces enhance anonymity and safety: the lack of a central point of control that can be taken down, assures continuity in the services and eliminates the risk of exit scams or robbery. Moreover, no data about transactions and users are collected and aggregated and there is no censoring or control. We expect a continuous evolution in OBMs digital infrastructures: as one of the LEA agents interviewed said: “ whatever we invent, there will always be crime ” (source I2 in Table 2 ).

5 Mechanisms

Through systematic retroduction we identified three high-level mechanisms of OBMs infrastructure. These mechanisms operate on the structural elements and leads to observable events. A schematic illustration is offered in Fig.  4 .

Events, mechanisms and structure

5.1 Mechanism 1: Commoditization

The first mechanism identified is “commoditization” (see fig. 5 ). The identification of this mechanism departed from the observation of OBMs’ normal functioning. The structure of marketplaces in OBMs is much the same as conventional OMs, enabling vendors and buyers to meet and trade at low transaction costs. Similarly to traditional OMs like Amazon and eBay, buyers can be victims of different forms of deception, such as for instance the non-delivery of items, product inauthenticity and misrepresentation. However, this risk is accentuated in OBMs, given the lack of transparency, law enforcement control, legal protection. It is not possible to appeal to trusted third parties in case of disputes, as it generally occurs when transacting in legal markets.

OBMs mechanisms

Despite these risks, evidence shows that online commerce of illegal goods is flourishing and successfully supporting buyers and vendors. How can the buyer, the vendor and the marketplace admin trust each other? Our data show that it is relatively easy for a buyer to browse offerings, select an object, purchase it anonymously and rate the vendor (source T1 in Table 2 ). Vendors can build their reputation by providing additional services and information to guarantee the quality of the purchase; as examples we can mention functions for checking the validity of stolen credit cards and refunding policies issued by vendors. Moreover, admins, in order to prevent deception, can implement advanced trust functions based on services and tools widely diffused in OBMs digital infrastructures (i.e. escrow). Given the absence of central actor trusted by all parties, the security of transactions is assured through decentralized systems such as cryptocurrencies and public key infrastructures. These arrangements imply a wider diffusion of illegal services. We use the term “commodity” to emphasize the standardized nature of services such as credit cards, botnet rental, phishing, etc. The increase in the diffusion of “commoditized” illegal services, attracts new buyers and vendors. The OBMs infrastructure benefits from additional buyers and vendors, since the quantity and the variety of goods increase. This process, in turn, attracts additional actors to create new offerings and generate an expanded marketplace in the OBMs infrastructure. We suggest calling this self-reinforcing mechanism “ commoditization ” (See Fig.  5 , left hand side). We define commoditization as a process where the OBMs infrastructure enables vendors to build their reputation and to assure the security of transactions through decentralized controls; successful purchases attract a critical mass of users to trade a greater variety of products and services.

5.1.1 Mechanism 2: Platformization

The second mechanism identified is called platformization (See fig. 5 ) . We already discussed the role of the OBMs infrastructure as a powerful resource for enabling the commerce of illegal goods. In OBMs marketplaces, hackers develop and sell new versions of malware and exchange information with peers through secure communication channels. The multiplicity of digital goods and services available in OBMs marketplaces triggers new forms of illegal activities. For instance, datasets with personal data are sold to conduct personalized phishing campaigns and perpetrate fraud on a large scale through the use of cryptocurrencies to collect payments and for money laundering. Furthermore, marketplaces admins constantly monitor the fast-evolving landscape of digital solutions and adapt their marketplaces by integrating functions to respond to users’ needs. Thus, marketplaces are enriched with new functions to fulfill the emerging needs of criminal communities (i.e. crowdsourcing innovation). For instance, a core function of the OBMs infrastructure is represented by electronic payment systems that are based either on Bitcoin or other cryptocurrencies. This enables the marketplace in the OBMs infrastructure to enhance their offering. We use the term “platformization” to emphasize this evolution over time.

We define “ platformization ” as a process where the OBMs infrastructure enables hackers to sell new digital goods and admins to enhance security and efficiency of transactions by implementing complementary features crowdsourced from external communities .

The two mechanisms described above are the basic forces of OBMs infrastructure, making operations possible despite the lack of transparency, law enforcement control, legal protection and centralized governance. The two mechanisms interact closely; network effects enacted by the commoditization mechanism increase the quantity and variety of offering and generate the means through which the platformization mechanism is established and operates. Platformization allows the development of enhanced network resources to better satisfy service and content needs for the multiple users involved. However, the OBMs infrastructure is also characterized by disruptions. The main sources of these breakdowns are the occasional failure determined by admins, hackers and LEAs. These dynamics are the basis for the third mechanism called resilience .

5.1.2 Mechanism 3: Resilience

Specific characteristics of the OBMs infrastructure (i.e. anonymity, untraceability, lack of legal protection and illegality of goods exchanged) can lead to sudden and frequent interruptions of normal functioning. Such interruptions can be caused by unpredictable events such as an exit scam or a police operation. In the first case, the deceivers exploit the opportunities created by the presence in the escrow system of substantial amounts of money: the deceiver may transfer cryptocurrencies to his own account, and close down the site without a trace for neither vendors nor buyers. In the case of police operations, we observe the actions of LEAs that seize websites and marketplace and block the trade of illegal goods.

There are observable consequences of those events. For instance, the number of OBMs significantly declines after documented police operations. Other examples of consequences are the reaction of the communities of users triggered by Sheep Market and Evolution exit scams. In the former case, a collective action was conducted to discover and disclose the identity of the deceiver. Following the latter, an increase in number of active sites was observed. After a period of “collective recovering” during which different actions take place, we observe changes in both processes and technologies. For instance, after an exit scam, vendors move to more trustworthy OBMs with enhanced security functionalities. Similarly, criminals react to the strategies implemented by LEAs by experimenting new attack schemes based on the adoption of advanced tools such as peer-to-peer markets (e.g. OpenBazaar), more reliable payment systems and encrypted point to point channels for communication (e.g. PGP keys). Therefore, a resilient OBMs infrastructure is generated by the interactions between anonymous actors and enhanced digital tools technologies.

We define “resilience” as the collective recovery actions undertaken by the user community resulting in the morphing of technologies and deception schemes in response to successful and unpredictable actions of actors with contrasting goals .

The 3 mechanisms and their interactions are reported in Fig.  5 .

6 Discussion

Our empirical domain offers the opportunity to study the functioning of OMs under unique institutional conditions: frequent disruptions and presence of unknown actors with conflicting goals. We also observe the coexistence of heterogeneous and adverse forces influencing infrastructural growth: the interplay of technological and social structures in OBMs produces outcomes that are different from those of traditional digital infrastructures (e.g. Henfridsson & Bygstad, 2013 ) in which sources of disruption are competitors and new entrants. In OBMs infrastructures, opposing forces offset the self-reinforcing dynamics of innovation , adoption and scaling . Innovation is hampered by the reduced possibility to combine services that are hidden. Adoption is discouraged by deceptive behaviors of buyers and vendors. Scaling is prevented by law enforcement operations that limit the reach of the infrastructure. Notwithstanding these adverse conditions, the OBMs infrastructure continue to operate. Hence, we return here to our research question, what are the generative mechanisms of the Online Black-Markets infrastructure?

We identified three mechanisms – commoditization , platformization and resilience – that explain OBMs operations as the result of interactions between structural elements and individual actions. The first two mechanisms (i.e. commoditization , platformization ) take place during regular market operations; they reveal in detail how the structuring of the illegal commercial transactions is key for the functioning of OBMs and show that the technical and social elements not only interact to facilitate transactions, rather they constitute OBMs, feeding on each other. The third mechanism (i.e. resilience ) instead focuses on the reaction to unpredictable and abrupt changes in the infrastructure (such as admins exit scams or LEA operations); it also shows how resilience emerges from the collective action of users recovering after an infrastructure breakdown.

Together the three mechanisms describe the generative forces of the OBMs infrastructure. They simultaneously interact to enable infrastructure operations. Each individual mechanism fails in producing this outcome independently. For instance, commoditized illegal goods and services fail to reach buyers without a platform that guarantee secure transactions. Moreover, secure transactions require innovative solutions to solve the problem of decentralized control (Li & Whinston, 2020 ). Similarly, when marketplaces growth in size, they may attract the attention of LEAs that will eventually interrupt their operations. The OBMs infrastructure has to cope with similar shocks. Without a resilience mechanism to recover from disruptions, activities could not be carried out anymore, services would not be accessible any longer and marketplaces would fail in attracting new offerings. The co-existence of the three mechanisms is necessary to generate the OBMs infrastructure.

A fundamental aspect that characterizes the three mechanisms is that they all share a community orientation. Online communities collectively contribute to build the reputation of buyers and vendors. Also, the technical solutions that are plugged in the marketplaces are produced by communities of hackers and software developers (Flowers, 2008 ). Finally, the recovery process that morph a marketplace following a disruption is also performed online by anonymous members of online communities interacting via social media (Huang & Benyoucef, 2013 ; Spagnoletti et al., 2015 ). Members of these communities are temporarily engaged in problem-solving activities without necessarily expressing solidarity with other users. Community support and other forms of participation characterizing social commerce in OMs are also present in OBMs despite the limited trust among e-commerce users. Our findings show that networks and bottom-up information flows trigger actions for infrastructure formation while in traditional mechanisms individuals recombine, adopt or add solutions (Henfridsson & Bygstad, 2013 ).

The proposed model of OBMs mechanisms increases our understanding of e-commerce and social commerce phenomena. Rather than focusing on the identification of contingency factors, it explains how institutional and social factors interact and influence the performance of OMs. Our model adds a process view to explain the role of social media in e-commerce (Huang & Benyoucef, 2013 ). It also challenges the current understanding on the role of institution-based trust in social commerce (Lu et al., 2016 ). In fact, it shows that proper transactional conditions in e-commerce can be created without the involvement of authorities and trusted third parties. Future studies may investigate these issues further to see how trust emerges as a combination of transaction, innovation and resilience behaviors, leading to a new definition of trust in social commerce (McKnight et al., 2002 ). The role of institutional structures can also be empirically explored in online contexts characterized by adverse conditions (Gefen & Pavlou, 2012 ). Furthermore, from the perspective of the marketplace administrator, future studies can address the problem of platform governance and control to balance transaction, innovation and resilience in platform ecosystems (Ceci, Prencipe, & Spagnoletti, 2018 ; Constantinides et al., 2018 ; de Reuver et al., 2017 ).

Our view of OBMs as digital infrastructures, complements the current understanding on value-creation in OBMs. Our mechanisms show that transaction and innovation dynamics are intertwined in OBMs marketplaces. While value chain and transaction cost models shed light on the structure of criminal networks (Bakken, Moeller, and Sandberg 2017 ; Huang et al. 2018 ; Kraemer-Mbula, Tang, and Rush 2013 ; van Wegberg et al. 2018 ), our model captures the dynamics of transaction and innovation processes that together generate the OBMs infrastructure. The OBMs operations rely on the successful execution of transactions whose security is assured by external computing and network resources, integrated in the infrastructure. Furthermore, additional external resources are mobilized to respond to failures and disruptions. OBMs’ resilience relies on external resources such as social media platforms (e.g. Reddit) that become temporarily part of the infrastructure to support a collective recovery process. Future studies can further investigate these processes by conducting content and network analysis of conversations on social media to reveal how cybercriminals coordinate for resilience (Décary-Hétu and Giommoni 2017 ; Lacson and Jones 2016 ).

The resilience mechanism of OBMs, shows that users engage in the framing of collective actions and beliefs that legitimize the activities of a collective, in absence of a central structure establishing uniform rules for all settings. Further investigations on the framing strategies and the pragmatic, cognitive and moral legitimacy in place, can offer unique insights on how a polycentric approach to governance may support successful infrastructure development and scalability. Therefore, future studies can focus on the development of digital infrastructures where data control is the outcome of collective action processes involving heterogeneous interests and resources of a distributed user base (Constantinides & Barrett, 2014 ).

 Our study also has important practical implications to face the societal challenges of civil security. We empirically support conjectures on the dynamics of innovation in illegal and online contexts and we advance previous studies by analyzing the phenomenon from an IS perspective. By looking at OBMs as a digital infrastructure we integrate the social and architectural aspects into a single view. We include criminal and law enforcement activities in a holistic model that shows the interdependency among different areas of illegal activities and their supporting technologies. We also conceptualize OBMs as crowd-powered catalyst organizations and recommend LEAs to monitor OBMs dynamics balancing the technological and the social dimensions. OBMs serves as digital innovation hubs for criminal communities and can be used to discover new schemas of illegal activities.

Finally, by focusing on OBMs resilience, the proposed model can be used as a reference tool for developing realistic scenarios on the effects of crowd-based infrastructure breakdowns. The outcome can be used to train LEAs and cyber-intelligence units. Our longitudinal and critical realist approach sheds lights on the processes that generate OBMs. The knowledge on the generative mechanisms can inspire the search for innovative lawful societal and technological means for preventing, detecting and investigating new forms of crimes.

7 Conclusion

In this paper, we investigated the OBM infrastructure through an in-depth analysis of its generative mechanisms. We offer two main contributions. Firstly, we advance the understanding on OMs by analyzing OBMs, a unique digital infrastructure characterized by the absence of formal rules, legal protection and social legitimacy and the resulting negative global impact of its social outcomes. The OBMs’ infrastructure is fueled by sociotechnical interactions and frequent shocks and operates despite the efforts of law enforcement institutions to suppress or eliminate it. Our study enabled us to identify three mechanisms that explain how OMs can operate under conditions of frequent and unexpected change. Secondly, by focusing on the community-based nature of the three mechanisms, we conceptualize OBMs as crowd-powered catalyst organizations and we discuss the implications for research and practice. We also offer methodological guidance to scholars and practitioners interested in making sense of observable events in this complex domain. Our three mechanisms explain OBMs’ operations and provide actionable knowledge for e-commerce and law enforcement. Notwithstanding the continuous evolution of OBMs and the limited timeframe of our data collection, our theoretical model also applies to OBMs’ phenomena emerging in the last three years. Thus, the evidence collected in seven years of OBMs’ evolution provided sufficient input and support to both complete the retroduction phase of our analysis and positively assess the explanatory power of the three mechanisms. Future studies can replicate our findings by applying the model to new impactful events such as recent marketplace seizures and Covid-19 related offerings.

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Acknowledgments

This research was partially supported by Luiss University. We are indebted to the representatives of Italian law enforcement agencies Polizia Postale and Carabinieri for sharing their expert views in data collection. Preliminary results have been presented at the 5th Innovation in Information Infrastructure (III) workshop held at Luiss in 2017 and at the Department of Information Systems at University of Agder. We also thank our colleagues Ann Majchrzak (University of Southern California), Richard Baskerville (Georgia State University) and Andrea Prencipe (Luiss University) who provided insighful feedback on earlier versions of this paper. All errors of facts and interpretation are the authors’ responsibility.

Open access funding provided by Luiss University within the CRUI-CARE Agreement.

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Paolo Spagnoletti

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Bendik Bygstad

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Spagnoletti, P., Ceci, F. & Bygstad, B. Online Black-Markets: An Investigation of a Digital Infrastructure in the Dark. Inf Syst Front 24 , 1811–1826 (2022). https://doi.org/10.1007/s10796-021-10187-9

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Contributor Notes

Their causes, nature, and consequences

This paper anlayzes the role of the International Financial Corporation (IFC) in promoting economic development in developing countries with the private sector. IFC promotes growth of new companies, indigenous companies, and helps to introduce more capital from private sources into developing countries. Many countries need to develop capital market institutions such as stock exchanges, securities companies, leasing companies, and financial intermediaries of one kind or another. IFC has a special department, partly financed by the World Bank, that has provided expertise in these areas to a number of countries.

Michael Nowak

Exchange controls have frequently been used by countries attempting to protect their international reserves in periods o balance of payments difficulties. Typically governments have viewed exchange controls as a substitute (or at least as a temporary stop-gap) for unpalatable adjustment measures, even though controls do nothing to address the underlying causes of external imbalance. Indeed, by aggravating existing distortions in relative prices and resource allocation, controls may exacerbate the very problems they were intended to alleviate.

As with any type of restriction, exchange controls encourage evasion. When this happens in an organized manner, “black markets” in foreign exchange arise (“unofficial,” “parallel,” or “curb” have also been used as terms to describe this type of market). Such markets are generally frowned upon by governments because they divert scarce foreign exchange from official channels to uses which the controls are trying to restrict. More important, black markets can affect the economy as a whole and have a number of important policy implications. These matters and other features of black markets in foreign exchange are discussed in this article.

• Causes and extent

There are three options open to a country encountering balance of payments difficulties: adjustment measures using the instruments of fiscal, credit, incomes, and exchange rate policy; external borrowing; or imposition of controls on international trade and payments. The first option may have short-term consequences for income distribution, employment, or inflation that governments would like to minimize, while the second—recourse to borrowing—is generally limited in scope, expensive, and capable of providing only temporary relief. Quantitative controls, on the other hand, may appear to provide a solution which has immediate and direct effects but is less troublesome in terms of its social and economic costs. Not surprisingly, therefore, controls have frequently been used in response to external imbalances, particularly among developing economies. (A full description of the exchange control regimes of Fund members may be found in the IMF’s Annual Report on Exchange Arrangements and Exchange Restrictions.)

A more extended analysis of this topic by the author , Quantitative Controls and Unofficial Markets in Foreign Exchange: a Theoretical Framework, has been published in IMF Staff Papers, June 1984 .

When quantitative controls take the form of restrictions on the availability of foreign exchange through official channels, black markets in foreign exchange invariably develop. If a central bank is unable, or otherwise unwilling, to meet all the demand for foreign exchange at its official exchange rate, those whose demand is frustrated will be prepared to offer a price above the official rate, as long as the risks and costs of evading the exchange control regulations are not prohibitive. Faced with such offers, those who earn or borrow foreign exchange will have an incentive to sell on the black market rather than to the central bank.

The size of any black market in foreign exchange and the exchange rate premium it commands over the official market will depend upon the range of transactions subject to controls and the tightness with which they are applied. In countries where the central bank satisfies a large proportion of the prevailing demand for foreign exchange, the black market will tend to be thin and the black market exchange rate volatile. Conversely, in those countries which face chronic balance of payments pressures and have insufficient reserves or borrowing capacity to defend the official rate, black market activities are typically well developed and organized, with the price of foreign exchange as much as ten times higher than the official rate. In a number of countries, black market transactions are officially tolerated, though strictly speaking illegal; under such conditions, the exchange rate in the black market can provide a fairly good indication of the extent to which the currency in the official market is overvalued.

• Demand and supply

The sources of demand and supply of foreign exchange in a black market obviously depend very much on the characteristics of the country concerned as well as the exchange control regulations. As a general rule, outward capital transfers, invisible payments, and certain imports (particularly of consumer items) considered inessential will make up the bulk of the demand for foreign exchange in the black market, since these are the types of transactions most frequently subject to control in the official market. While central banks are usually prepared to sell foreign exchange to meet demand for imports such as basic foods, petroleum, and inputs for the export sector, in extreme cases where a country is facing particularly severe balance of payments pressures, these items, too, may be subject to restrictions, and foreign exchange demand to finance them will also tend to spill over into the black market.

Quantitative restrictions may constitute part of the formal exchange control machinery. Those who wish to purchase foreign exchange at the official rate can then obtain advance information of their entitlement from the general rules that apply; these may be in the form of quantitative limits on invisible payments, such as overseas travel, or they may comprise allocations for the purchase of specified imports. Frequently, however, restrictions arise in an ad hoc manner as a result of foreign exchange being withheld after authorization has been granted and payment has fallen due. These types of restrictions, known as payments arrears, have grown markedly in recent years with respect to both trade and debt obligations; they have had particularly damaging effects on the international credit standing of the countries concerned.

While commodity exports provide the bulk of foreign exchange earnings in most countries, proceeds from the smuggling abroad of export products will not necessarily account for a large part of the foreign exchange sold on the black market. Apart from commodities produced close to the frontier and involving relatively low transport costs, the black market is more likely to be fed from other sources of foreign exchange where evasion of the law is easier. Notable among these are sales of foreign exchange by tourists, diplomats, and foreign workers; remittances sent back by nationals resident abroad; and, perhaps most important of all, the overinvoicing or underinvoicing of trade documents.

Overinvoicing of imports (that is, overstating the value of an approved import) will allow an importer to obtain additional foreign exchange at the official rate, which he can resell at a profit in the black market. Similarly, an exporter who underinvoices (that is, understates the value of goods exported) can sell the unreported part of the value of his exports on the black market. In both these transactions, which frequently take place with the collusion of the external seller or buyer, the true price is misstated and foreign exchange is diverted away from the official market by the premium offered in the black market. (But it is not always the case that improper invoicing is a source of supply to the black market. For example, where import duties are high compared to the black market premium, it will be profitable to underinvoice imports and purchase the necessary balance of foreign currency in the black market. Likewise, there will be an incentive to overinvoice exports in instances where a relatively high export subsidy is provided.)

Black markets in foreign currency do not necessarily operate within the frontiers of the country concerned. There are many cases of unofficial transactions being handled in offshore locations, usually in a country which is a major source of foreign exchange. The obvious advantage offered by offshore transactions is the comparative ease with which exchange control regulations can be evaded.

• Consequences

Were controls to be effectively implemented, they could provide protection against reserve loss, even though they would still fail to address the fundamental economic policy weaknesses that lie at the root of chronic balance of payments difficulties. Invariably, however, controls are evaded through improper invoicing of trade documents and other leakages arising from the spread between the official and black market exchange rates. As a consequence, a central bank may find itself faced with continuing pressures on its international reserves and a loss of firm control over the uses of foreign exchange it allocates. Exchange controls also have unintended consequences which may involve substantial social and economic costs. The most prevalent of these are inflationary effects, distortions caused in the pattern of resource allocation, and bureaucratic corruption. Each may be considered in turn.

In an economy where the central bank defends a fixed exchange rate without resort to exchange controls, reserve losses through the balance of payments will act as a brake on excessive monetary expansion. When controls are applied, this automatic mechanism limiting the build-up of inflationary pressures is no longer operative. While the prices of nontraded goods tend to rise as fast, if not faster, than the prevailing rate of inflation, the prices of traded goods will be held down by conditions in international markets and the official exchange rate. The resulting decline in the price of traded, relative to nontraded, goods will encourage, on the one hand, a reallocation of resources away from production of exports and import substitutes and, on the other, a shift in consumer preferences in favor of imports. The consequence will be an oversupply of those goods which do not generate or save foreign exchange and an insufficient supply of those that do. This suboptimal pattern of production and consumption will involve a real cost to the economy and a loss of national income and welfare. Furthermore, without corrective policy action, the distortions in relative prices resulting from the controls will tend to grow increasingly acute over time.

To the degree, therefore, that black market activities circumvent foreign exchange controls, they may fulfill a useful function in the sense that they mitigate the adverse repercussions of quantitative restrictions on the allocation of resources. They provide exporters who do not sell foreign currency to the official market with increased prices and allow importers to purchase goods which they could not otherwise obtain at prices they are willing to pay. In this way, the black market provides a mechanism by which the domestic currency effectively undergoes a depreciation in its external value, while the official rate is fixed.

The application of exchange controls entails the rationing of scarce resources through means other than the price mechanism. As a general rule, this rationing will take place in accordance with established economic and social priorities, as embodied in the regulations governing exchange control procedures. But, in spite of this, officials of central banks or government departments invariably find themselves with discretionary powers to allocate foreign exchange. This may be because the exchange control regulations are not being strictly adhered to or, more usually, because the regulations themselves allow foreign exchange approval to be granted in a discretionary manner. This is particularly true for those foreign exchange approvals typically made on a case-by-case basis, such as those for nonessential imports, payments of arrears, and various invisible payments, including education and medical expenses.

The danger then arises that decisions made by officials in such “gray areas” not clearly defined by exchange control regulations will be influenced by the potential profits to be made by exploiting the exchange rate differential between the official and black markets. This differential places a premium on gaining access to the official market and thus exposes the officials responsible for making foreign exchange allocations to an environment conducive to corruption. Indeed, the political leverage of those groups with vested financial interests in the maintenance of controls may account for the reluctance of some governments to dismantle them.

• Some policy considerations

If indeed black market activities do temper some of the harmful consequences of quantitative restrictions, then measures aimed at repressing these activities (such as stricter enforcement of exchange control laws and harsher penalties) would serve only to make matters worse. On the other hand, liberalizing exchange and trade restrictions in the face of continuing balance of payments pressures is likely to lead to the exhaustion of reserves and the emergence of new arrears. If external balance is to be restored without renewed resort to controls, the adjustment process will usually require policies to curb the growth of domestic expenditures and encourage a transfer of resources to the traded goods sector.

It is in the area of exchange rate policy that governments have, in general, shown most reluctance to undertake corrective action in addressing balance of payments problems, even when there are clear indications that the currency in the official market is grossly overvalued. To some extent, this is attributable to pressures from interest groups anxious to maintain the existing distribution of income. In addition, though, the reluctance of governments to undertake a devaluation reflects concern over the effects on prices and real wages. Such concern is not necessarily warranted.

• Devaluation and inflation . For economies with exchange controls in place, the adverse short-term impact on prices and real wages normally associated with a devaluation will already have been partially felt as a result of the depreciation of the currency in the black market. Once the official rate is devalued, the extent to which the domestic price and cost structure adjusts may be limited, if not negligible. The actual magnitude of the direct impact on prices will depend on the response of the exchange rate in the black market and on the size of this market relative to the official market. Devaluation will also affect domestic prices through indirect effects on the money supply and output.

A devaluation of the official exchange rate raises the domestic currency price of officially traded goods relative to that of nontraded goods, and thereby provides an incentive to increase domestic production of exports and import substitutes. The resulting increase in the country’s overall foreign exchange earnings will cause, other things given, an appreciation of domestic currency in the black market, even though sales to the black market may contract. In theory, therefore, one would expect the prices of imports purchased on the black market to decline when the official rate is devalued. When a relatively large proportion of the economy’s foreign exchange transactions are conducted on the black market, a devaluation of the official rate could have a significant deflationary impact on consumer prices.

In practice, however, one might not observe, in the short run at least, an appreciation of the domestic currency in the black market following a devaluation. For a number of export commodities, particularly agricultural products, it may take some time for production, and thus the supply of foreign exchange, to respond to favorable shifts in relative prices. Moreover, in cases where export activities are dominated by foreign-owned enterprises, the amount of foreign exchange brought into the country by them in order to cover local production costs (which are fixed in terms of domestic currency) will fall as a result of a devaluation and this could cause the black market rate to depreciate. Another factor affecting the relationship between the black and official market exchange rates concerns the role of expectations. If a devaluation was widely anticipated, the black market rate will have adjusted in advance as a result of speculative activity. The direction of the movement in the black market rate at the time of the devaluation will then depend on the size of the devaluation, compared with initial expectations; if it turns out to be less than expected, there will be a tendency for the black market rate to decline. If the underlying rate of currency depreciation is substantial, because for example, the domestic inflation rate is substantially greater than that prevailing externally, this could mask any appreciation of the black market rate that may take place as a result of a change in the official rate.

In any event, even though the black market rate may depreciate following a devaluation, it is most improbable that the exchange rate premium on the black market will rise. Hence, solely in terms of the direct price effects, one could safely argue that a devaluation will be less inflationary when there is a black market than when there is not. The inflationary impact associated with the imposition of controls will, of course, already have taken place.

A devaluation may also set in motion deflationary forces through its impact on the money supply and output. For example, a devaluation which is undertaken in the context of an economic adjustment program will generally involve external financing additional to that which the country in question might normally obtain. While such financing will allow some replenishment of reserves, it will also permit a liberalization of the exchange control regime and an increased flow of imports of goods and services. This will help contain any inflationary pressures resulting from the direct price impact of a devaluation. In addition, excessive monetary expansion may be curbed by a widening of the tax base following a devaluation, although the overall effect on the central government’s borrowing requirement will, of course, depend also on the response of expenditures.

• A measure of overvaluation? Under certain conditions, the black market rate can provide useful information on the extent to which the domestic currency has become overvalued in the official market and on the size of the devaluation required to restore an equilibrium rate. If the argument that a devaluation of the official rate will lead to an appreciation of the black market rate is correct, one can infer that the official rate would not have to be adjusted fully to the level of the black rate in order to bring about a reunification of the two rates.

Caution should, however, be exercised in making such judgments since, in some instances, restoration of external equilibrium may require that the official rate be depreciated by more than the prevailing exchange rate premium in the black market. For example, the black rate may be more appreciated than the equilibrium rate if the central bank is selling foreign reserves (running a balance of payments deficit), or if the costs of undertaking illegal transactions on the black market are large and if they affect the buyers of foreign exchange more than the suppliers. Use of the black market rate as an indicator of the overvaluation of the official rate must, therefore, be supplemented by other indicators of disequilibrium, such as real effective exchange rate indices and medium-term balance of payments estimates. (See “Determining the appropriate exchange rate in LDCs,” by A.H. Mansur, Finance & Development , December 1984.)

• Transitional arrangements . In the process of liberalizing exchange and trade controls, a number of countries have adopted transitional arrangements involving multiple exchange markets designed to spread the costs of adjustment over time. The transitional arrangements often legalize the existing black market and erect formal controls for delineating transactions between the two markets. Not infrequently, however, legalization of the black market is accompanied by new restrictions on demand that result in the emergence of an illegal third market. Sometimes these restrictions are not applied formally through exchange control regulations but arise in an ad hoc manner because the exchange rate in the secondary market is fixed and the central bank is unable to meet all the prevailing demand for foreign exchange from its reserves.

While transitional arrangements apply, the community as a whole would benefit if the government were to appropriate the profits that accrue to those individuals who are able to obtain access to the relatively cheap foreign exchange in the official market. While eliminating controls and levying a tax on imports and invisible payments is one possible way of achieving this, it is not usually particularly appealing to central banks because they lose direct control over the amount of foreign exchange sold. One method of appropriating the rent, but still allowing the central bank to retain quantitative control over its reserves, is to auction the available pool of foreign exchange. This is equivalent to a tax with a variable rate assessed on the difference between the official exchange rate and the auction price. Schemes to auction import licenses yield the same benefits.

The actual reunification of the two foreign exchange markets can be achieved through progressive devaluations of the official rate and the phased transfer of transactions from the official to the secondary market. It is important that this transitional process be undertaken fairly rapidly, so that any initial improvement in relative prices in favor of the traded goods sector is not eroded.

• In conclusion …

When confronted with balance of payments difficulties, policymakers frequently resort to imposing exchange and trade controls as a means of providing protection against reserve loss. Other forms of remedial action, in particular devaluation, are often avoided for fear of kindling inflationary pressures and lowering real incomes. This article has argued that controls are a poor substitute for devaluation and complementary demand management policies. When controls are imposed, the resulting depreciation of the currency in the black market will have inflationary consequences similar to those of an official devaluation. For this reason, once a devaluation actually takes place when controls are present, the inflationary impact may be very limited. In addition, however, controls may be self-defeating. While they restrict the uses for which official foreign exchange may be purchased, by causing distortions to relative prices, controls may also divert resources away from those sectors that either earn or save foreign exchange. Society as a whole is generally made worse off as a result of controls, but substantial benefits may still accrue to those groups with privileged access to subsidized foreign exchange in the official market. In many instances, the political leverage applied by such groups intent on safeguarding their vested interests provides further resistance to devaluation, even in the face of chronic foreign exchange shortages.

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Black-Markets for Currency, Hoarding Activity and Currency Reform

In the former Soviet Union and throughout Eastern Europe, black-market exchange rates and second-economy prices often are interpreted by policy-makers as indicative of post-reform levels. However, these exchange rates and prices can provide highly-biased signals for policy setting. These biases are especially important when exchange rates fixed on the basis of these signals are expected to play a nominal anchor role during stabilizations. This paper traces the paths and biases in black-market exchange rates, second-economy prices, hoarding stocks. and privately-held dollars balances after policy-initiatives or other changes in the economic environment are implemented. The stimuli studied are official exchange-rate adjustments, price reforms, foreign-aid packages, altered risks of monetary confiscation or currency reforms, and goods-supply related initiatives. We provide the conditions under which announcements of reform lead short-run prices or exchange rates to overshoot or to undershoot their long-run equilibrium levels.

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Introduction

Black markets reflect human needs, wants, and values. Unmet demand drives black market activity – fulfilling needs for some and pleasure for others. There is a strong intersection between vices and black-market activity as social pressure fuels markets. Through the lens of our class readings, discussions, and coursework, we find that our papers in this book examine how individual values, group needs, and societal wants drive black markets globally in a wide variety of contexts. We also find that the risks and stakes associated with black markets vary according to context as the markets adapt and improvise in response to their surroundings, taking advantage of opportunities provided by both regulation and lack of regulation in licit markets. A result is that black market activity blurs and challenges our conventional notions of order. Fueled by incessant demand, the parameters of legality are challenged, with licit institutions cozying up to illicit ones who are happy to return the favor. These black markets permeate our lives in an endless Catch-22, refusing to die out as they do whatever they must to survive.

Group Needs 

People’s lives are surrounded by needs. People need shelter, clothing, sleep and nutrition so they can survive. They need money to satisfy these needs. Most people turn to a 9 to 5 job to make money, but others turn to illicit forms of business. The following papers will dive deeper into the need to make money through different forms of illicit businesses.

Mahi Patel’s “Bollywood? Brothel.” delves deeply into the world of notorious pimp Gangubai Kathiawadi and the larger Mumbai underworld by analyzing a book chapter, “The Matriarch of Kamathipura,” and the subsequent movie made about her life, Gangubai Kathiawadi . The essay describes and analyzes Gangubai’s journey from being a victim of sex trafficking to becoming the President of Kamathipura (the red-light district of Mumbai). Hers is a story of immense pain but also an absolute desire to do whatever it takes to survive. Gangubai’s need for survival was the precipice on which her actions were based, but eventually, when she had secured survival for herself, she was able to transform and address the need to make money to ensure the survival of other victims of sex trafficking.

Grace Tibshrany’s essay “Secret Little Facilitators of Black Markets” connects the cosmetics black market in her life to the rest of the world, illuminating her analysis of children’s roles as black market bosses. Carly, a college friend, has operated a nail business since middleschool, and she performs manicures for Grace with illicit materials purchased as a minor. Grace uses this personal scenario to segue into consideration of thriving black markets that are actually child operated. The basic human instinct to make money and need to feel satisfied for doing a job well done pushes children to run businesses. However, these businesses are in fact illicit and go under the radar. Grace explores the specifics of the greater cosmetics black market that perpetuates her friend’s black-market business, as well as why child-owned businesses constitute as black markets, and the advantages these businesses have through being illicit. Without the need to generate income and feel fulfilled, these black markets would not exist.

Bradley Kelley’s “Organized Crime in the Modern Age” examines how organized crime has prospered in the last century. During the Prohibition Era members of the mafia supplied alcohol to make money. In the 1980s Russian and Italian mobs worked to pocket taxes on gas that people needed. Colombian and Mexican cartels sold drugs all over the United States as their sole source of income. In each of these scenarios each group needed to make money. While government pursued criminal organizations for breaking the law and taking money that the government deserved, these organizations created businesses that met people’s needs, including the needs of members of the criminal organizations. However, sometimes the businesses paid the price for breaking the law.

Societal Wants Drive the Demand for Black Markets

While each human possesses various individualized wants, different wants emanate within societal culture. While  individual wants are subjective in nature to a specific person, place, or group, they are  built upon a pre-existing foundation. Societal desires compound individual values and group needs to ensure the longevity of black-market systems. These wants are often not fulfilled through legal means, offering a golden opportunity for black markets to begin operating in the respective market. Societal wants ensure the longevity and continuity of various black markets that the following writings expand upon.

Katie Bernfeld’s “University of the Underground” explores black market operations on college campuses. From ticket scalping, “plugs,” fake IDs and selling homework, to drugs ranging from coke to adderall to caffeine – this microclimate is charged by societal desires which ultimately promote the longevity of this vast ecosystem.

Valerie Antenucci’s “The Black Gold of the Sea” explores caviar’s role in high society and its impacts on the  environment. Luxury goods are unnecessarily expensive and cause more damage than many would except. This chapter describes the black-market context that creates the perfect environment for damages to ecosystems and the caviar trade’s dramatic economic and social consequences.

Steven Kozakiewicz’ “Underage College Students Desire to Consume Alcohol Fuels the Fake ID Black Market” provides insight on one of the premier black markets in America, the fake ID market amongst underage college students. The writing explores the college age students’ deeply-rooted societal desire to consume alcohol. While simultaneously exploring various views on underage consumption, current governmental interventions, and the overall structure of the fake ID black market, the flow and continuity of the fake ID black market is spotlighted and explained to the reader.

Individual Values

Entry into the black market is driven by decisions made as individuals follow their personal value systems. These values are made due to priorities pushing individuals away from the conventional markets, whether due to legal constraints, social pressures, or other situational factors. The following papers detail stories of people worldwide who fall into the black market due to their personal beliefs and values.

Patrick Lee’s “The Plate Pilgrimage” follows several characters in Chinese society who attempt to acquire or sell license plates, a commodity made scarce due to extreme regulation. Motivated by the importance they place on marriage, familial reputation, or money, these individuals enter this illicit market as vendor or buyer to help achieve their goal. While success is limited, their journeys spent navigating the system reveal just how important the license can be to alignment of their value system.

What drives someone to do something? In a deep character analysis of the famous AMC show Breaking Bad, Jay Zheng dissects the profound truth behind Walter White’s fall to the black market. At the show’s beginning, Walter White was tempted into the black market to help his family financially. As the show develops, viewers see how the family value slowly decays, and something evil grows anew in its place. Or were the decayed values always there waiting for the right moment to fester and grow?

“Flower of the Golden Triangle” by Mercy Cuai reflects her encounter with recovered heroin addicts in church and how their change in values defines their changed lives, from drug addicts to full devoted Christians. Many young ethnic minorites in Burma choose to move away to cities or rural northern Burma in pursuit of work opportunities. Their days mining for jade in Kachin state comes with temptations of drugs. Many men fall into addiction, and later, some manage to turn their life around with the help of rehabilitation centers or religious groups. The drugs come from the Golden Triangle, a nearby region well known for illicit drug trade. The Golden Triangle borders Thailand, Burma and Laos. The rise of opium production and heroin distribution from the region has a history involving the Koumintang (KMT), a former socialist Chinese party, and the CIA. The heroin trade emanating from the Golden Triangle became the second largest in the world. Its impact on heroin users is felt from the opium smokers in the region, to heroin addicts near the region, and to addicts, those recovering from addiction, and families globally.

Perspectives on Black Markets V.6 Copyright © by Michael Morrone et. al. is licensed under a Creative Commons Attribution-NonCommercial-NoDerivatives 4.0 International License , except where otherwise noted.

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Black markets, transplant kidneys and interpersonal coercion

One of the most common arguments against legalising markets in human kidneys is that this would result in the widespread misuse that is present in the black market becoming more prevalent. In particular, it is argued that if such markets were to be legalised, this would lead to an increase in the number of people being coerced into selling their kidneys. Moreover, such coercion would occur even if markets in kidneys were regulated, for those subject to such coercion would not be able to avail themselves of the legal protections that regulation would afford them. Despite the initial plausibility of this argument, there are three reasons to reject it. Firstly, the advantages of legalising markets in human kidneys would probably outweigh its possible disadvantages. Secondly, if it is believed that no such coercion can ever be tolerated, markets in only those human kidneys that fail to do away with coercion should be condemned. Finally, if coercion is genuinely opposed, then legalising kidney markets should be supported rather than opposed, for more people would be coerced (ie, into not selling) were such markets to be prohibited.

It is well known that a thriving international black market in human kidneys exists and also that the vendors in such a market suffer from a variety of abuses, ranging from fraud to outright coercion. 1 Yet at the same time that the horrors of the black market in human kidneys are becoming widely recognised, there is growing support for markets in kidneys to be legalised. 2 , 3 , 4 , 5 , 6 Believing that trade in human kidneys cannot be eliminated, some people support its legalisation on the grounds that if it is legalised the abuses that now occur in the black market can be mitigated through regulatory control. 7 Others adopt a more principled approach, arguing that legalising markets in human kidneys is required to respect the moral values of personal autonomy and human well‐being. 8 The proponents of legalisation hold that once such markets are legal, the ability of their participants to seek legal redress against fraud and coercion would suffice to protect them from abuse.

Yet, many who oppose such legalisation claim that it is naive to believe that regulated markets in human kidneys would mitigate the abuses of the black market. Rather than mitigating the abuses of the black market, such people claim, legalising markets in human kidneys will increase them. This is because the typical kidney vendor would lack adequate access to legal representation and so the protections that the proponents of kidney markets believe would be ensured by regulatory control would be illusory.

If it is true that legalising markets in human kidneys would in practice increase the number of people who suffer from the abuses inherent in the black market, then this would be a powerful objection to legalising them—even if in theory legalising this market is required owing to consideration for autonomy or concern for human well‐being. Objection to legalisation has gained support because of the documented abuses of the black market in human kidneys and also because the typical vendor is desperately poor and hence lacks easy access to legal representation. Yet, despite the widespread acceptance of this objection to legalisation, I believe it is seriously flawed—and that if we are concerned about reducing the abuses of the black market for human kidneys, we should favour the legalisation of kidney markets, not their continued prohibition.

Regulatory control and interpersonal coercion

The abuses that occur in the black market for human kidneys are both widespread and well documented. Vendors regularly receive less for their kidneys than they agree to sell them for. They fail to receive the postoperative care that they were promised, and are often deceived about the medical risks that they run in selling a kidney. We have also found well‐documented cases of people being coerced into selling their kidneys by their family members. The end‐use purchasers of black market kidneys have received diseased organs, or kidneys that were not suitable, and have suffered as a result of their bodies rejecting them.

Pro‐market argument from regulatory control

The proponents of legalisation argue that such abuses are a result of the illegal status of markets in human kidneys. Hippen, 9 for example, argues that “the absence of any appeal to an enforceable rule of law that binds individuals to contracts means that defrauding vendors [in the black market] is routine”. Similarly, de Castro 10 holds that “Being underground, the [black] market is not subjected to institutional regulation that could ensure proper pretransplant and post‐transplant care for the donors …”. The defrauding of kidney vendors would thus be greatly reduced, if not eliminated, if markets in human kidneys were to be legalised, and the contracts entered into within them legally enforceable. 11 This would mean that people who received a defective kidney would have legal redress against those from whom they purchased it. Legalising a market in human kidneys would thus seem to protect those who would participate in it as vendors and as end‐use purchasers.

Responding to the pro‐market argument from regulatory control

Despite the elegance and simplicity of this pro‐market argument, many who oppose legalising a market in human kidneys find it unpersuasive, for they believe that it fails to represent how a kidney market would operate in practice. As Scheper‐Hughes 12 writes

Armchair bioethicists can ignore the real world and its messy social, economic, cultural, and psychological realities. They only need conjure up a hypothetical world where conditions can be controlled or manipulated so as to favour the logic of a market approach to increase the “supply” of human organs for transplantation.

Such critics reason that the proponents of the pro‐market argument assume that those who participate in a legal kidney market would have access to legal recourse if they were defrauded or coerced into selling their kidneys. They claim, however, that in reality this will probably not happen. The people who sell their kidneys will typically be the desperate poor, “nobodies”, 13 a “discredited collection of anonymous suppliers of spare parts”, 14 who are “socially invisible”, 15 and “naive”, 16 and whose voices have been “silenced”. 17 Although not every kidney vendor is disenfranchised in this way, there is a subset of vendors who clearly do suffer such a fate: those who are so under the control of their family members that they could be coerced by them into selling their kidney against their will. 1

People who are coerced into selling their kidneys are those who are unable to protect their own interests through legal means. Given this, legalising a market in human kidneys would worsen the situation for such people, through making greater numbers of them vulnerable to being coerced into selling their kidneys. In a legal market for kidneys, these people's family members would have easier access to kidney brokers, and this would encourage them to coerce those in their power into selling. The anti‐market response to the pro‐market argument about the benefits of regulation is as follows:

• There are disenfranchised people who are subject to coercion by others.
• These people would not be able to pursue legal means to protect their interests.
• Legalising a market in human kidneys would encourage the dominators of such disenfranchised people to coerce them into selling their kidneys.
• Hence (from premises 1–3), even if a legal market for human kidneys were to be regulated, the numbers of people who would be coerced into selling their kidneys would increase.
• Therefore (from premise 4), if we are concerned about reducing the number of people coerced into selling their kidneys, we should oppose the legalisation of markets in human kidneys.

Assessing the anti‐market argument from interpersonal coercion

An initial pro‐market response.

The first response to this anti‐market argument is to note that it may be levelled against markets in any goods, on the grounds that disenfranchised people may be coerced into selling them. 18 A proponent of the anti‐market argument, however, has a ready reply: “Being coerced to sell some possessions such as old shoes, or some books, or some corn from a cornfield is not always, if ever, as seriously harmful … as being coerced into selling one of one's own bodily organs”. 19 Thus, as being coerced into selling a kidney would usually (if not always) adversely affect sellers more seriously than if they were coerced into selling other goods, we are justified in treating markets in kidneys differently from markets for other goods (such as shoes or books or corn). In offering this reply the anti‐marketeer accepts that possibly, for some people, being coerced into selling “old shoes, or some books, or some corn from a cornfield” would be worse than their being coerced into selling their kidneys. Perhaps, for example, the old book is the Torah that their father kept with him through the holocaust, or the old shoes are those that their ancestor Van Gogh painted. Yet, even though this is so, the anti‐marketeers can bolster their arguments by noting that the numbers of people being coerced into selling such items (ie, items whose owners consider them to be more valuable than their kidneys) would be small, whereas the number of people who would be coerced into selling their kidneys would be large if markets for them were legalised. The anti‐marketeer thus has two replies to this initial response:

• that coercing a person into selling a kidney is usually worse than coercing him or her into selling some other good and
• that the prevalence of coercion in a kidney market would be much greater than that which may occur in other markets.

Given these differences between markets, it seems that the argument from interpersonal coercion can be levelled against markets in kidneys without committing its proponents to also advocating the prohibition of markets in other goods.

Assessing this consequentialist defence of the argument from interpersonal coercion

The replies that anti‐marketeers can offer to defend their argument are explicitly consequentialist in character. The first is based on noting that coercing people into selling a kidney would usually be worse than coercing them into selling some other good, and that this justifies treating kidney markets differently from other markets. The second is based on holding that markets in certain goods are acceptable even if they permit people to be coerced into selling things that are extremely valuable to them (eg, their heirlooms), provided that such coercion would rarely occur, and so its ill effects would be outweighed by the advantages of allowing markets in the goods in question. These anti‐market replies can thus be met in two ways. One could show that the numbers of disenfranchised people who would be coerced into selling their kidneys in a legal market would be low, and so the harm that they would suffer were such a market to be instituted would be akin to that suffered by the (few) people who are coerced into selling their heirlooms. (Response A) Thus, as markets in heirloom goods are morally legitimate, so are markets in kidneys. Alternatively, we may show that even if considerable number of kidney vendors were coerced into selling, the harm that they would be subject to would be outweighed by the benefits that a kidney market would confer on others. (Response B)

Response A seems to be readily available for the proponent of current markets in human kidneys. In the most extensive study of the Indian black market in kidneys that has been carried out to date, Goyal et al 1 found that of the 305 kidney sellers they interviewed only 2 had been coerced into selling their kidneys. This seems to show that the number of people who may be subjected to interpersonal coercion to sell a kidney is in acceptable limits. The anti‐marketeers, however, have three responses to this.

Firstly, they may contest the claim that having about 0.66% of kidney vendors being coerced into selling represents an acceptable level of coercion.

Secondly, they may note that the number of people who would be coerced into selling their kidneys still seems to be far higher than the number of those who are likely to be coerced into selling (eg) their heirlooms. Thus, they may claim, the analogy between allowing markets for such possessions (which seems to be morally acceptable) and markets for kidneys is weakened—and so is the pro‐market response.

Finally, the anti‐marketeer could note that the number of people who reported to Goyal et al , 1 that they were coerced into selling their kidneys, is probably less than the number of those who were actually coerced, for the truly disenfranchised would be likely to conceal this information for fear of displeasing their coercers. Thus, the anti‐marketeer may conclude, the analogy offered in response to the anti‐market argument from interpersonal coercion (ie, between selling kidneys and selling heirlooms) is probably weaker than it seems.

Response B is stronger. If we take the anti‐market consequentialist replies seriously, then we will accept that even if some people are coerced into selling their kidneys a legal market in these organs would be morally acceptable if its benefits outweigh this cost. And it seems undeniable that this would be so. People who sell their kidneys without being coerced into doing so would benefit in that they would secure something that they valued more than their kidneys (ie, cash). The end‐users of these kidneys would also benefit, by exchanging their money for (to them) a more valuable kidney. Thus, given that the number of people who would sell their kidneys without being coerced into doing so would (from the data supplied by Goyal et al 1 ) probably be much greater than those who would be coerced into doing so, the benefits of a market would greatly outweigh its costs. The consequentialist replies that may be offered by the anti‐marketeer should thus be rejected.

Assessing the deontological defence of the argument from interpersonal coercion

Although the consequentialist objections that the anti‐marketeer may offer against markets in human kidneys can be met, we may still object to such markets on the deontological grounds that coercion is morally wrong. Therefore, if such markets are likely to enable coercion to occur, then this shows that they should remain illegal. Two initial points need to be made about this deontological version of the anti‐market argument from interpersonal coercion. Firstly, the proponents of this argument are not attempting merely to show that certain cases (ie, those that occur as a result of coercion) of kidney sales are morally wrong. (This could be accepted by all parties to the debate.) Rather, they are attempting to support the much stronger claim that the possibility of such coercion would justify the prohibition of all such sales on moral grounds. Secondly, this argument is not a blanket argument against all markets in human kidneys. Instead, it is only an argument against those markets that are not structured to preclude people being coerced by others into selling their kidneys. This deontological argument can thus be met by ensuring that legal markets in human kidneys are structured so that those who participate in them as vendors do so willingly. To achieve this, two conditions should be met. Firstly, the pool of potential vendors should be restricted to people who can show that they are not disenfranchised. It could, for example, be required that for people to sell a kidney they must have a certain level of education, have a certain income and have access to legal counsel. 20 Secondly, it can also be required that a potential kidney seller be demonstrably eager to sell, rather than merely fail to be reluctant to sell, on the grounds that such an attitude would be harder to falsify. To ensure that the potential vendors meet these conditions, their enfranchisement should be assessed by independent third parties who would issue licenses to sell their kidneys to people they judged to be free from coercion. 21 , 22 The participation of such licensing parties would be required to allay fears that corrupt officials would be misclassifying disenfranchised people. 23

Yet, any such system of licensing kidney vendors can be criticised from both the pro‐market and the anti‐market positions. Anti‐marketeers would note that no such system would be flawless, and that some disenfranchised people would still be coerced into selling their kidneys. By contrast, pro‐marketeers would note that such licensing would result in fewer people who were willing to sell their kidneys being allowed to do so and fewer people who needed a kidney being able to secure one. Taken together, these observations provide the basis for a further response to the earlier deontological argument. In prohibiting people who, without coercion, were willing to sell their kidneys from doing so, the licensing bodies outlined would themselves be engaging in coercion. They would be coercing people into not selling by threatening them with punishment if they sold their kidneys without the requisite license. One who is morally concerned about coercion, then, should consider not only that some disenfranchised people would be coerced into selling their kidneys, but also that prohibiting markets in human kidneys, or restricting who is allowed to participate in them as vendors, is also coercive. 24 People who are concerned about coercion should thus assess the number of people who are likely to be coerced when current markets in human kidneys are prohibited (or regulated) against the number of those people who are likely to be coerced when such markets are legalised (or unregulated). Given the available evidence, such an assessment is likely to favour the legalisation, rather than the prohibition, of current markets in human kidneys. As we noted above, very few people are likely to be coerced into selling their kidneys. The evidence from Iran, however, shows that there are large number of people who are willing to sell their kidneys: More than 8400 kidneys were bought from living people who were unrelated to their organs' recipients between 1988 and 2000. 25 Thus, if a market in human kidneys is legalised, few people would be coerced into selling; however, if the market is prohibited, a greater number of people would be coerced into not selling. Hence, if we are concerned about the moral badness of coercion, then we should favour legalising markets in human kidneys, rather than prohibiting them.

Three reasons for rejecting the widely accepted anti‐market argument from interpersonal coercion are as follows:

• The advantages of legalising markets in human kidneys would probably outweigh their disadvantages.
• If we believe coercion to be a moral wrong, we should not condemn all markets in human kidneys, but only those that fail to eliminate coercion.
• If we are morally concerned about coercion, then we should support, rather than oppose, legalisation of kidney markets—even if such markets do not eliminate coercion.

This is because more people would be coerced (ie, into not selling) if such markets were to be prohibited. Of course, rejecting this anti‐market argument does not show that markets in human kidneys should be legalised. But it does show that one of the main objections to them should not be accepted.

Acknowledgements

I thank an anonymous referee for his or her exceptionally helpful comments on an earlier version of this paper.

Competing interests: None.

The black market in academic papers – and why it’s spooking publishers

Senior Lecturer in Learning Technology, Bath Spa University

Disclosure statement

Dana Ruggiero does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.

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A colleague of mine recently posted a plea on an open forum asking for someone with access to please send her a copy of a journal article. This colleague works at one of the premier research institutions in the EU which has an annual budget of over €100m, yet she had to ask her connections on Facebook for access to a scholarly article. Her university did not have access to this piece of literature that she needed to complete her research.

This story isn’t unique. Many academics have to seek other means for finding articles rather than pay the minimum US$30 that most publishers charge to access an article.

Instead, a black market of scholarly papers exists that those in the know can access as easily as using a hashtag on Twitter: #ICanHazPDF. This system relies on academics helping each other. I post a request for a paper and in ten minutes a response with an attachment may come back to me. The original tweet is then deleted.

Other disciplines have set up listservs and private sites with similar goals: those in need can ask those with access and online journal articles or books are provided free of charge. “There is a cool network of psychology students who have shared stuff by request for a couple of years, its called the European Federation of Psychology Students’ Associations and we were all friends helping friends,” Aart Franken, a recent PhD graduate from Utrecht University in the Netherlands, told me.

Enter Sci-Hub

For the last few years, there has been a new player in town. Sci-Hub , a website developed in 2011 by Alexandra Elbakyan , a researcher from Kazakhstan, is a repository for over 48m papers which continues to grow every day. Elbakyan has been called a modern-day Robin Hood by some.

The publishing company Elsevier is currently suing Sci-Hub and Elbakyan in New York for copyright infringement. After Elsevier won a temporary injunction against the site in January, it reopened with a new domain name. Alicia Wise, Elsevier’s director of universal access, said that for the company : “It’s as if somehow stealing content is justifiable if it’s seen as expensive … It’s not as if you’d walk into a grocery store and feel vindicated about stealing an organic chocolate bar as long as you left the Kit Kat bar on the shelf.”

But Sci-Hub has changed the way that many think of public access. Unlike previous systems, it keeps a copy of the requested paper on its server so that it doesn’t have to go looking for it when someone else asks. Now instead of asking a group of your peers or sending out a hopeful tweet, anyone can go to Sci-Hub and see whether the paper is there. Within 30 seconds the site loads a PDF version of the requested article that Sci-Hub has accessed from Libgen – a search engine for scientific articles and books, which allows free access to otherwise paywalled content – or skimmed from the publisher.

An affordability problem

As an academic who publishes within the traditional journal system, it’s worth looking at the normal scenario of scholarly publishing.

• An article is written and submitted to a journal.
• That article is accepted after revision and the author is asked to sign away copyright.
• The author is given the chance to publish “open access” which requires the author or the university to pay – in the case of Elsevier, between US$500 and US$5,000 . Other publishers have similar policies .
• If the author cannot afford this fee, or their university refuses to pay it, or the grant that funded the research does not allow payment for publishing, the article is published closed and only those with subscriptions can access it. (Green open access, or the ability to self-archive the accepted version of the article in an institutional repository, is free of charge either immediately or after an embargo period depending on the publisher.)

This last point about affordability is the norm. Not many academics can afford to publish open access with top-tier journals, but for their careers, they can’t afford not to publish in what are known as “high-impact” journals. As Katrin Becker, adjunct professor in computer science and game design at Mount Royal University, in Canada, told me:

Open access that requires authors to ‘buy’ the publication of their articles is wrought with problems, from silencing adjuncts and people without grants, to potentially influencing acceptance based on money rather than the quality of the research.

The difference between academic publishing and other types of creative work is in who owns the rights and who gets paid. Simply put, the author does not get money once the article is published in the journal, the academic editors and peer reviewers are not paid for reviewing these articles. The publisher gives nothing and gets everything.

Academics have the choice where to publish but once the article has been signed over we have no voice in the process – our only choice is to not choose specific publishers.

The pursuit of knowledge

The open access movement has come out of the idea that publicly-funded research should be available to the public. As my colleague Grainne Conole, former professor of education at Bath Spa, told me: “Research is about sharing and discussing our findings with peers, research shouldn’t be locked up in closed systems.”

There are thousands of open access journals but many of them are seen to lack the prestige that universities demand for researchers. We are stuck: academics can’t afford to read their own work but they can’t afford not to publish in these prestigious journals if they want to advance their careers.

Sci-Hub has provided a new path . It doesn’t fix the flawed system of academic publishing, but it does let those without traditional access read the scholarly articles they need to complete their degrees, work on their research projects, and keep up to date with their fields.

As Martin Weller, professor of educational technology at the Open University, told me:

Sci-Hub is a bit like distant thunder at a picnic for publishers. They ignored open access, then tried to discredit it, then tried to make extra money from it – but Sci-Hub may make them actually address the issue.

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The University of Chicago The Law School

Abrams environmental law clinic—significant achievements for 2023-24, protecting our great lakes, rivers, and shorelines.

The Abrams Clinic represents Friends of the Chicago River and the Sierra Club in their efforts to hold Trump Tower in downtown Chicago accountable for withdrawing water illegally from the Chicago River. To cool the building, Trump Tower draws water at high volumes, similar to industrial factories or power plants, but Trump Tower operated for more than a decade without ever conducting the legally required studies to determine the impact of those operations on aquatic life or without installing sufficient equipment to protect aquatic life consistent with federal regulations. After the Clinic sent a notice of intent to sue Trump Tower, the State of Illinois filed its own case in the summer of 2018, and the Clinic moved successfully to intervene in that case. In 2023-24, motions practice and discovery continued. Working with co-counsel at Northwestern University’s Pritzker Law School’s Environmental Advocacy Center, the Clinic moved to amend its complaint to include Trump Tower’s systematic underreporting each month of the volume of water that it intakes from and discharges to the Chicago River. The Clinic and co-counsel addressed Trump Tower’s motion to dismiss some of our clients’ claims, and we filed a motion for summary judgment on our claim that Trump Tower has committed a public nuisance. We also worked closely with our expert, Dr. Peter Henderson, on a supplemental disclosure and on defending an additional deposition of him. In summer 2024, the Clinic is defending its motion for summary judgment and challenging Trump Tower’s own motion for summary judgment. The Clinic is also preparing for trial, which could take place as early as fall 2024.

Since 2016, the Abrams Clinic has worked with the Chicago chapter of the Surfrider Foundation to protect water quality along the Lake Michigan shoreline in northwest Indiana, where its members surf. In April 2017, the U. S. Steel plant in Portage, Indiana, spilled approximately 300 pounds of hexavalent chromium into Lake Michigan. In January 2018, the Abrams Clinic filed a suit on behalf of Surfrider against U. S. Steel, alleging multiple violations of U. S. Steel’s discharge permits; the City of Chicago filed suit shortly after. When the US government and the State of Indiana filed their own, separate case, the Clinic filed extensive comments on the proposed consent decree. In August 2021, the court entered a revised consent decree which included provisions advocated for by Surfrider and the City of Chicago, namely a water sampling project that alerts beachgoers as to Lake Michigan’s water quality conditions, better notifications in case of future spills, and improvements to U. S. Steel’s operations and maintenance plans. In the 2023-24 academic year, the Clinic successfully litigated its claims for attorneys’ fees as a substantially prevailing party. Significantly, the court’s order adopted the “Fitzpatrick matrix,” used by the US Attorney’s Office for the District of Columbia to determine appropriate hourly rates for civil litigants, endorsed Chicago legal market rates as the appropriate rates for complex environmental litigation in Northwest Indiana, and allowed for partially reconstructed time records. The Clinic’s work, which has received significant media attention, helped to spawn other litigation to address pollution by other industrial facilities in Northwest Indiana and other enforcement against U. S. Steel by the State of Indiana.

In Winter Quarter 2024, Clinic students worked closely with Dr. John Ikerd, an agricultural economist and emeritus professor at the University of Missouri, to file an amicus brief in Food & Water Watch v. U.S. Environmental Protection Agency . In that case pending before the Ninth Circuit, Food & Water Watch argues that US EPA is illegally allowing Concentrated Animal Feeding Operations, more commonly known as factory farms, to pollute waterways significantly more than is allowable under the Clean Water Act. In the brief for Dr. Ikerd and co-amici Austin Frerick, Crawford Stewardship Project, Family Farm Defenders, Farm Aid, Missouri Rural Crisis Center, National Family Farm Coalition, National Sustainable Agriculture Coalition, and Western Organization of Resource Councils, we argued that EPA’s refusal to regulate CAFOs effectively is an unwarranted application of “agricultural exceptionalism” to industrial agriculture and that EPA effectively distorts the animal production market by allowing CAFOs to externalize their pollution costs and diminishing the ability of family farms to compete. Attorneys for the litigants will argue the case in September 2024.

Energy and Climate

Energy justice.

The Abrams Clinic supported grassroots organizations advocating for energy justice in low-income communities and Black, Indigenous, and People of Color (BIPOC) communities in Michigan. With the Clinic’s representation, these organizations intervened in cases before the Michigan Public Service Commission (MPSC), which regulates investor-owned utilities. Students conducted discovery, drafted written testimony, cross-examined utility executives, participated in settlement discussions, and filed briefs for these projects. The Clinic’s representation has elevated the concerns of these community organizations and forced both the utilities and regulators to consider issues of equity to an unprecedented degree. This year, on behalf of Soulardarity (Highland Park, MI), We Want Green, Too (Detroit, MI), and Urban Core Collective (Grand Rapids, MI), Clinic students engaged in eight contested cases before the MPSC against DTE Electric, DTE Gas, and Consumers Energy, as well as provided support for our clients’ advocacy in other non-contested MPSC proceedings.

The Clinic started this past fall with wins in three cases. First, the Clinic’s clients settled with DTE Electric in its Integrated Resource Plan case. The settlement included an agreement to close the second dirtiest coal power plant in Michigan three years early, $30 million from DTE’s shareholders to assist low-income customers in paying their bills, and $8 million from DTE’s shareholders toward a community fund that assists low-income customers with installing energy efficiency improvements, renewable energy, and battery technology. Second, in DTE Electric’s 2023 request for a rate hike (a “rate case”), the Commission required DTE Electric to develop a more robust environmental justice analysis and rejected the Company’s second attempt to waive consumer protections through a proposed electric utility prepayment program with a questionable history of success during its pilot run. The final Commission order and the administrative law judge’s proposal for final decision cited the Clinic’s testimony and briefs. Third, in Consumers Electric’s 2023 rate case, the Commission rejected the Company’s request for a higher ratepayer-funded return on its investments and required the Company to create a process that will enable intervenors to obtain accurate GIS data. The Clinic intends to use this data to map the disparate impact of infrastructure investment in low-income and BIPOC communities.

In the winter, the Clinic filed public comments regarding DTE Electric and Consumers Energy’s “distribution grid plans” (DGP) as well as supported interventions in two additional cases: Consumers Energy’s voluntary green pricing (VGP) case and the Clinic’s first case against the gas utility DTE Gas. Beginning with the DGP comments, the Clinic first addressed Consumers’s 2023 Electric Distribution Infrastructure Investment Plan (EDIIP), which detailed current distribution system health and the utility’s approximately $7 billion capital project planning ($2 billion of which went unaccounted for in the EDIIP) over 2023–2028. The Clinic then commented on DTE Electric’s 2023 DGP, which outlined the utility’s opaque project prioritization and planned more than $9 billion in capital investments and associated maintenance over 2024–2028. The comments targeted four areas of deficiencies in both the EDIIP and DGP: (1) inadequate consideration of distributed energy resources (DERs) as providing grid reliability, resiliency, and energy transition benefits; (2) flawed environmental justice analysis, particularly with respect to the collection of performance metrics and the narrow implementation of the Michigan Environmental Justice Screen Tool; (3) inequitable investment patterns across census tracts, with emphasis on DTE Electric’s skewed prioritization for retaining its old circuits rather than upgrading those circuits; and (4) failing to engage with community feedback.

For the VGP case against Consumers, the Clinic supported the filing of both an initial brief and reply brief requesting that the Commission reject the Company’s flawed proposal for a “community solar” program. In a prior case, the Clinic advocated for the development of a community solar program that would provide low-income, BIPOC communities with access to clean energy. As a result of our efforts, the Commission approved a settlement agreement requiring the Company “to evaluate and provide a strawman recommendation on community solar in its Voluntary Green Pricing Program.” However, the Company’s subsequent proposal in its VGP case violated the Commission’s order because it (1) was not consistent with the applicable law, MCL 460.1061; (2) was not a true community solar program; (3) lacked essential details; (4) failed to compensate subscribers sufficiently; (5) included overpriced and inflexible subscriptions; (6) excessively limited capacity; and (7) failed to provide a clear pathway for certain participants to transition into other VGP programs. For these reasons, the Clinic argued that the Commission should reject the Company’s proposal.

In DTE Gas’s current rate case, the Clinic worked with four witnesses to develop testimony that would rebut DTE Gas’s request for a rate hike on its customers. The testimony advocated for a pathway to a just energy transition that avoids dumping the costs of stranded gas assets on the low-income and BIPOC communities that are likely to be the last to electrify. Instead, the testimony proposed that the gas and electric utilities undertake integrated planning that would prioritize electric infrastructure over gas infrastructure investment to ensure that DTE Gas does not over-invest in gas infrastructure that will be rendered obsolete in the coming decades. The Clinic also worked with one expert witness to develop an analysis of DTE Gas’s unaffordable bills and inequitable shutoff, deposit, and collections practices. Lastly, the Clinic offered testimony on behalf of and from community members who would be directly impacted by the Company’s rate hike and lack of affordable and quality service. Clinic students have spent the summer drafting an approximately one-hundred-page brief making these arguments formally. We expect the Commission’s decision this fall.

Finally, both DTE Electric and Consumers Energy have filed additional requests for rate increases after the conclusion of their respective rate cases filed in 2023. On behalf of our Clients, the Clinic has intervened in these cases, and clinic students have already reviewed thousands of pages of documents and started to develop arguments and strategies to protect low-income and BIPOC communities from the utility’s ceaseless efforts to increase the cost of energy.

Corporate Climate Greenwashing

The Abrams Environmental Law Clinic worked with a leading international nonprofit dedicated to using the law to protect the environment to research corporate climate greenwashing, focusing on consumer protection, green financing, and securities liability. Clinic students spent the year examining an innovative state law, drafted a fifty-page guide to the statute and relevant cases, and examined how the law would apply to a variety of potential cases. Students then presented their findings in a case study and oral presentation to members of ClientEarth, including the organization’s North American head and members of its European team. The project helped identify the strengths and weaknesses of potential new strategies for increasing corporate accountability in the fight against climate change.

Land Contamination, Lead, and Hazardous Waste

The Abrams Clinic continues to represent East Chicago, Indiana, residents who live or lived on or adjacent to the USS Lead Superfund site. This year, the Clinic worked closely with the East Chicago/Calumet Coalition Community Advisory Group (CAG) to advance the CAG’s advocacy beyond the Superfund site and the adjacent Dupont RCRA site. Through multiple forms of advocacy, the clinics challenged the poor performance and permit modification and renewal attempts of Tradebe Treatment and Recycling, LLC (Tradebe), a hazardous waste storage and recycling facility in the community. Clinic students sent letters to US EPA and Indiana Department of Environmental Management officials about how IDEM has failed to assess meaningful penalties against Tradebe for repeated violations of the law and how IDEM has allowed Tradebe to continue to threaten public and worker health and safety by not improving its operations. Students also drafted substantial comments for the CAG on the US EPA’s Lead and Copper Rule improvements, the Suppliers’ Park proposed cleanup, and Sims Metal’s proposed air permit revisions. The Clinic has also continued working with the CAG, environmental experts, and regulators since US EPA awarded $200,000 to the CAG for community air monitoring. The Clinic and its clients also joined comments drafted by other environmental organizations about poor operations and loose regulatory oversight of several industrial facilities in the area.

Endangered Species

The Abrams Clinic represented the Center for Biological Diversity (CBD) and the Hoosier Environmental Council (HEC) in litigation regarding the US Fish and Wildlife Service’s (Service) failure to list the Kirtland’s snake as threatened or endangered under the Endangered Species Act. The Kirtland’s snake is a small, secretive, non-venomous snake historically located across the Midwest and the Ohio River Valley. Development and climate change have undermined large portions of the snake’s habitat, and populations are declining. Accordingly, the Clinic sued the Service in the US District Court for the District of Columbia last summer over the Service’s denial of CBD’s request to have the Kirtland’s snake protected. This spring, the Clinic was able to reach a settlement with the Service that requires the Service to reconsider its listing decision for the Kirtland’s snake and to pay attorney fees.

The Clinic also represented CBD in preparation for litigation regarding the Service’s failure to list another species as threatened or endangered. Threats from land development and climate change have devastated this species as well, and the species has already been extirpated from two of the sixteen US states in its range. As such, the Clinic worked this winter and spring to prepare a notice of intent (NOI) to sue the Service. The Team poured over hundreds of FOIA documents and dug into the Service’s supporting documentation to create strong arguments against the Service in the imminent litigation. The Clinic will send the NOI and file a complaint in the next few months.

Students and Faculty

Twenty-four law school students from the classes of 2024 and 2025 participated in the Clinic, performing complex legal research, reviewing documents obtained through discovery, drafting legal research memos and briefs, conferring with clients, conducting cross-examination, participating in settlement conferences, and arguing motions. Students secured nine clerkships, five were heading to private practice after graduation, and two are pursuing public interest work. Sam Heppell joined the Clinic from civil rights private practice, bringing the Clinic to its full complement of three attorneys.

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