Friday, June 03, 2011

Supply and Demand in Illegal Markets

Just finished the first week of summer session by covering the chapter on supply and demand. This post by Megan McArdle documents an interesting case of an increase in supply.

Mr. Stevens said stolen credit cards usually sold for about $5 to $10 online, yet the prices vary based on the amount of information supplied with the card data and the account limit.

Hackers who claim they are responsible for the Sony breach wrote on underground forums last week that they had access to over 2.2 million credit cards. If these millions of new stolen cards were sold online, the price could fall to well below the standard rate to as low as $1 or $2 each.

I like to point out to students that just because something is illegal doesn't mean there isn't a market for it. Being illegal merely raises the opportunity cost.

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