RASTA Local Research, Local Solutions: Markets & Regulations, Volume V

Edited by Nadeem Ul Haque and Faheem Jehangir Khan

in PIDE Books from Pakistan Institute of Development Economics

Abstract: Khokhas are one of the key segments of the informal economy of Pakistan. The khokhas provide jobs to many people and provide easy access to consumers to various goods and services. However, on average, one observes a very unorganised and shabby structure of the khokhas across Pakistan. This raises the question of why this is the case. Is everyone allowed to start khokhas in any market in Pakistan or does there exist some legal framework? The analysis of the legal framework is important for understanding the barriers to entry and, thus, competition in the khokha market of Pakistan. In addition, we examined the behavioural side of the people associated in any capacity with the khokha markets. We aimed to provide an answer to the question of whether it is the legal side or the behavioural side of the associated people that deters them from entering the khokha market. For this purpose, we reviewed the legal framework and collected primary data from the owners of khokhas. We found that the legal framework is the dominant factor that deters them from entering the khokha market. There exists no legal framework to obtain a license for establishing khokha in the cities which were included in our study. Entrepreneurs set up the khokha with a constant fear of demolishment, fines, confiscation, and arrest. We also found that the harassment of current vendors from public authorities is a major behavioural barrier for prospective entrants. We propose a detailed set of policies that can be adopted for creating a formal legal framework for khokhas across Pakistan.

Keywords: RASTA Local Research; Local Solutions; Markets & Regulations; Volume V (search for similar items in EconPapers)
Date: 2022 Written 2022 Originally published 2022.
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