Such countries certainly do have informal markets that operate along side the more normal ones: fake goods, fake alcohol, cigarettes and other tobacco, fake fashion items etc etc etc....Often sold by petty criminals in pubs. On the internet. Locally known suppliers. Sometimes found on market stalls, and do on. On top of this is illegal drugs of all types. The list is endless.

Things are done about very serious cases with faulty, dangerous goods. But there's too much going on to track it all. So if no-one is really being hurt, that tends to get left. That way, local peace is kept. Sellers can feed themselves. Buyers understand they're not getting the real thing, but are happy with what they can afford.

Christopher NOCK

Thanks Christopher, I believe if they are providing fake products than there must be a punishment for this fake. but if the product is not than what we can do as a policy maker.

It's a good question, and not easy to answer. Here in the UK, the long established legal rule is something called "caveat emptor" which means "buyer beware." So, if you buy a fake it's your fault. A lot of people buy them knowingly to get the style, at a fraction of the cost. If the product is actually dangerous, then that's a different matter. The seller has a duty of care towers you. But that's difficult to enforce in these cases.

One problem here is the cost of enforcement. Police have little time or money for catching small criminals. The big ones can afford good lawyers!

NOCK

Dear colleagues. the informal is a world reality only it is in the underdeveloped countries that the phenomenon is more apparent and more important. in many of these countries it accounts for more than 50% of employment and GDP. In developed countries it is more the underground economy that is most studied (fraud and tax evasion and social .....)

Dear Nock, I believe that it depend on the shadow or informal activities and the action different in developed than in developing countries

Also it s very interesting the awareness of the customer and their rights is also important, than itit is the customer call.

Dear Badou, i believe that poverty and income inequality level shape the % of informal activity , especially in developing countries.

Very good! I also like your response to Babou. It's not something I've ever thought about, but it makes good sense!

NOCK

IT NEED TO WORK ON IT

THANKS AGAIN DEAR FRIENDS

Good luck with it!

NOCK

When I saw this question, I was initially thinking of the economic sense of market correction, meaning that when there are inefficiencies in the market, there needs to be regulations to correct these failures (because they affect supply and demand). However, what you mean are the protection of property rights, and whether the institution should do that even if it interferes with the market. That is an interesting question, because Douglass North would say that strong insitutions protect the labor and property (like contracts/copyrights/trademarks) rights and this would create certainty in the market where people will continue to be productive and engage in transactions in order to keep the economy growing. However, liberal economic principles say that government (or institutions) should not intervene unless there is market failure (like in supply and demand). So if there is a demand and adequate supply of illegitimate handbags, then should institutions intefere? There are no market failures.

Ah, Sabine, thank you! I'm not sure I've got it even now, but I'm thinking "correcting corrupt (alternative) market practices." Now this is really about protecting property rights in the widest sense: brands, trade marks, French terroirs (no more Canadian champagne 😥), and so on. Well the property owners are the identifiers mainly, but they need support from state enforcement. Or you might think it's not a real problem. No one really believes their £30.00 Rolex is genuine, and it might just stop them mugging me for my real one?

NOCK

well, @Christopher Nock, it is a problem and arguably if trademarks and copyrights aren't enforced by the State then it can stifle creation and innovation, hence impacting the economy. However, does it really impact the economy, if Rolex doesn't succeed because some counterfeiters managed to make nice looking watches and gain the market share? Thus, these counterfeiters could actually be spurring market growth if they managed to increase sales for watches, and Rolex and other designers are not able to compete. Isn't that how the free market is supposed to work?

Mmmmmmm, I just don't know!!! Help me, help me!

In some ways I dislike copyrights very much because they restrict access to generic drugs around the world. But, I also know they're expensive to develop and companies "deserve" a fair profit....

I don't mind trademarks if they're directly linked to a particular producer... it's important information.

I hate and despise "brands". Bloody cowboys. Produce nothing, but have your name stamped on it. Fashion for sad people....

NOCK

dear Nok, we have common thoughts concerning branding and the over value of prices but this is the cost of brand and market power. a strategy that MNC use to set prices very high.

Sabine, my question was focusing on market failure and the consequences of it. But not branded products because the informality exist not in the innovative driven products.