How Informal Economies Shape Pricing in La Paz, Bolivia
La Paz and the growing visibility of its informal economyLa Paz, Bolivia’s administrative capital, is a high-altitude urban center where formal and informal economic activity coexist tightly. The informal economy in Bolivian cities is large by international standards, with urban informality accounting for roughly two-thirds of non-agricultural employment and a notable, though hard-to-measure, share of local output. In La Paz this informal presence shapes how goods and services are priced, how firms compete, and how consumers make choices.How informality changes price formationInformal economic actors shape price dynamics through various channels that diverge from conventional market signals:Lower visible costs and tax…
