Identity data, e.g. data to gain online access to computers, bank accounts, and credit card data, are traded in online marketplaces. This paper investigates the functioning of illegal online markets. These markets lack state regulation and the means to enforce agreements and the paper shows that they use alternative mechanisms to create trust among market participants. The sales outlets of illegal online markets are able to self-regulate the market and should be considered as a major device that makes cyber crime profitable.

Illegal markets differ from legal markets in many respects. Although illegal markets have economic significance and are of theoretical importance, they have been largely ignored by economic sociology. In this article we propose a categorization for illegal markets and highlight reasons why certain markets are outlawed. We perform a comprehensive review of the literature to characterize illegal markets along the three coordination problems of value creation, competition, and cooperation. The article concludes by appealing to economic sociology to strengthen research on illegal markets and by suggesting areas for future empirical research.

Illegal markets differ from legal markets in many respects. Although illegal markets have economic significance and are of theoretical importance, they have been largely ignored by economic sociology. In this article we propose a categorization for illegal markets and highlight reasons why certain markets are outlawed. We perform a comprehensive review of the literature to characterize illegal markets along the three coordination problems of value creation, competition, and cooperation. The article concludes by appealing to economic sociology to strengthen research on illegal markets and by suggesting areas for future empirical research.

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