Socioemotional Wealth and Product Differentiation in the Informal Economy: A Simple Theroetical Model

Augendra Bhukuth, Damien Bazin and Abir Khribich
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Abir Khribich: Université Côte d'Azur, CNRS, GREDEG, France

No 2022-09, GREDEG Working Papers from Groupe de REcherche en Droit, Economie, Gestion (GREDEG CNRS), Université Côte d'Azur, France

Abstract: In this article we develop a simple product differential model in which the input, socioemotional wealth, takes the form of knowledge sharing between employees. Competition in the informal economay depends on product differentiation, and our model shows that when micro family enterprises in the informal economy rely on family workers to differentiate their products from those of their competitors, they increase their productivity, remain competitive, and sustain their activities in a highly competitive market. Micro family enterprises reward the loyalty of family workers by providing them with social benefits, whereas the wage depends on the knowledge shared between workers.

Keywords: informal economy; know-how (savoir-faire); micro-small enterprises; product differentiation; SEW (search for similar items in EconPapers)
JEL-codes: D21 D29 L21 L23 L25 (search for similar items in EconPapers)
Pages: 24 pages
Date: 2022-03
New Economics Papers: this item is included in nep-com, nep-des, nep-iue and nep-sbm
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Persistent link: https://EconPapers.repec.org/RePEc:gre:wpaper:2022-09

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