By Jonathan P. Caulkins

Illegal markets create untold societal and environmental harm, but they have attracted surprisingly little scholarly attention. This paper explores illegal markets as a class of objects. It considers similarities and differences across markets, with particular attention to nine: human smuggling, commercial sex, firearms, money laundering, illegal fishing, international wildlife trafficking, counterfeit goods, drugs, and tobacco products. These nine markets display enormous variation, stemming in part from differences in the “physics” of the good or service they provide. Other differences can be seen as adaptations to different policy and enforcement pressures. Some markets have changed in fundamental ways over recent decades, while others remain more stable. The overall rate of true innovation is not necessarily high, but most appear quick to
adopt innovations that are created by the larger economy such as cryptocurrencies, secure communications, and dark web distribution. Low rates of investment in research and development, branding, and marketing along with simultaneous high rates of adaptability may be a natural outgrowth of these markets being dominated by relatively small organizations. It is hypothesized that one can group the common illegal markets into those that: 1) Supply goods stolen from a common heritage, either natural (illegal fishing,
wildlife trafficking, illegal mining) or cultural (antiquities); 2) Supply goods or services to people committing crimes beyond just consuming the banned products (guns, money laundering); 3) Undermine an authority’s rights (smuggling humans across borders, counterfeiting goods, tax-evading cigarettes); and 4) Supply products that harm the user and/or seller (drugs, commercial sex, gambling, raw milk).

By Paolo Campana

Human smuggling is the facilitation of unlawful cross- border movement. It is primarily a commercial activity, offered as a service to willing, paying customers, and a large- scale market catering to millions seeking to circumvent mobility restrictions. Contrary to prevailing media and political narratives that depict smuggling as dominated by powerful and highly sophisticated criminal organizations, this study documents a fragmented, decentralized market composed of independent, localized actors operating through flexible, often temporary networks. These flexible arrangements, coupled with low barriers to entry, confer resilience and adaptability to the market, making enforcement difficult and resource- intensive. Intensified enforcement often produces unintended consequences, including heightened migrant vulnerability and increased reliance on smugglers. Despite regional differences, smuggling operations exhibit striking structural similarities shaped by local knowledge and monitoring costs. Such enduring structural characteristics exist alongside a growing role played by communication technologies, which are reshaping dynamics between service providers and customers. Ultimately, human smuggling remains a market fraught with paradoxes: Migrants face severe risks yet view smugglers as essential facilitators severe risks yet view smugglers as essential facilitators, while states confront the complex task of balancing border enforcement with humanitarian obligations and protections of vulnerable individuals.