What Sustains Informality? A Study of the Interactions between Formal and Informal Sector Firms

Bibliographic Data

ID20303182
AuthorsAjit Mishra (0000-0002-2003-3796, Institute of Economic Growth, University of Delhi Enclave, Delhi, India; University of Bath, Bath, UK, corresponding author)
Year2022
Volume58
Issue7
Pages1403-1415
Publication date2022-07-03
Open AccessYes
TypeARTICLE
VenueThe Journal of Development Studies (JOURNAL)
Journal identifiersISSN: 0022-0388 • E-ISSN: 1743-9140
PublisherInforma UK Limited (PUBLISHER • GB)
DOI10.1080/00220388.2022.2061853
OpenAlexW4281930473
LanguageEN
Citations received4
References cited20

This paper considers two vertical links between informal and formal sector firms and studies their implications. First, we model a situation where final products produced by the formal and informal sector firms are differentiated in terms of quality and consumption demand for the informal sector firm is related to the distribution of income. Less well-off consumers generate demand for the low-priced, low quality good produced by the informal sector. Our paper studies the implications of this link for the size of the informal sector. Second, we analyse a situation where, instead of competing with the formal sector firm, the informal sector firm produces an intermediate good for the other firm

Business · Consumption (sociology) · Economics · Industrial organization · Informal sector · Labour economics · Market economy · Microeconomics · Public economics · Quality (philosophy) · Sociology · Digital Economy and Work Transformation · Sharing Economy and Platforms · Taxation and Compliance Studies

Tools

Open DOIOpen Access