Lifting the Veil of Greyness: Understanding the Intersection of Illicit and Licit Markets

• In Event: Money laundering, economic crime and illicit markets

Abstract

‘Grey’ areas are omnipresent and the term is used instinctively for various situations. It is used whenever something is undefined, uncertain, ambiguous, or open to discussion. The term is also used to justify legally or morally ambiguous actions. Criminology and other disciplines researching economic crimes frequently cite grey areas as spaces where illicit actors interact with the licit economy. However, what defines greyness, how it emerges, and what it consists of remain unclear. Despite its frequent use, greyness is not a strictly defined or conceptualised term. While grey areas exist in many contexts, this paper is concerned with greyness in relation to economic crime.
If greyness acts as a veil connecting licit and illicit economies, its existence has broad economic implications. A coherent conceptualization of greyness enables more targeted economic crime research. This paper attempts to conceptualize greyness by analysing existing concepts from various disciplines. This analysis clarifies greyness in market dynamics and connects existing concepts. It identifies the underlying mechanisms that create greyness and their role in economic crime.
In law and economics, ‘grey markets’ refer to the illicit import and distribution of licit trademarked goods. These grey markets exist parallel to and compete with regular, authorised markets – often with the competitive advantage of lower prices while profiting, for example, from the trademark owners’ reputation and advertisements. Beyond these disciplines, greyness appears across disciplines with varied concepts and terminologies. Currently, multiple concepts address illegality, uncertainty, ambiguity, and greyness in the functioning of markets. These concepts share a focus on situations where objects, actions, actors, or funds exist between licit and illicit realms. Some arise from research on licit markets, others from illicit markets, and some from their intersection. This paper clarifies these concepts and their connections, offering fruitful pathways to framing illicit and licit markets in future research.

Author

• Konstantin Jänicke, Maastricht University, PRICELESS