What threats does the informal economy present to firms operating in the

formal economy?
 Low Cost
- Taxes in the informal economy may go unsettled which makes it easier for the
informal market to sell at a low price or low cost. Formal market, on the other hand,
is having a hard time selling the same at a low cost
 Job Opportunity
- People, most likely, can get a job easily in the informal economy rather than in
formal economy for the reason that in formal economy there are many
qualifications needed. By means of this, there are more work force in informal
economies than formal economies.
 Political Conflict
- The imbalance between the informal economy and formal economy might lead to
political conflict by the reason that informal economy don’t incur the cost of
regulation and won’t pay taxes in which formal economy has to settled.