Respuesta :
Formal markets are highly structured, whereas informal are less structured, with fewer rules
What are formal and informal markets?
We look into how formal and informal markets coexist. We suppose that vendors can openly advertise their pricing and locations in legal markets, while sellers in unofficial markets must engage in bilateral negotiations in order to maintain their anonymity in front of the taxation authorities. We think about two models. As a benchmark, we first restrict market switching to sellers exclusively, allowing us to extract certain analytical findings that demonstrate the presence of a stable equilibrium where formal and unofficial markets coexist. We also show that some sellers will move from the formal market to the informal market in the event that the formal market's advantage in quality assurance deteriorates, the government imposes more taxes and regulations on the formal market, the risk of crime and/or confiscation declines in the informal market, or the informal market experiences an increase in buyers. When the opposite developments take place, some merchants will move from the unofficial to the official market. After that, both buyers and sellers are free to swap markets. In this scenario, we demonstrate that there exists a singular locally stable equilibrium where formal sector sellers' and purchasers' net costs of trading have the opposite signs.
To know more about formal and informal markets visit:- https://brainly.com/question/24084694
#SPJ4
