[dmix]

You mischaracterized my argument. To reiterate:

If somebody is going to do it anyway it is therefore often better to have it done in public rather than pushed into black markets via controls (see: drug war).

The additional condition I provided is where the black market options are much weaker or limited than the possible public options, allowing the markets to effectively circumvent or eliminate the negative utility of the black market products - therefore making controls a valid option (see: nuclear arms).