Informality, Size and Regulation: Theory and an Application to Egypt

Informality, Size and Regulation: Theory and an Application to Egypt The paper shows how, when the enforceability of regulationsis size-sensitive, price competition can lock firms into informality and,thus, smallness, depending on the form of the production function. In thatcontext, exogenous "help" packages targeted to informal firms "promote"micro and small enterprises (i.e., increase their numbers) but do not"develop" them (i.e., foster their growth). The "help" only generates ashort-term span of abnormal profits for existing informal firms, and a long-term income transfer toward informal-market consumers. The model istested in the context of Egypt's micro and small enterprise sector. Small Business Economics Springer Journals

Informality, Size and Regulation: Theory and an Application to Egypt

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Kluwer Academic Publishers
Copyright © 2000 by Kluwer Academic Publishers
Business and Management; Management; Microeconomics; Entrepreneurship; Industrial Organization
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