Purchasing from informal markets: evidence from Serbia

This paper exploits a relatively unique survey conducted in Serbia in late 2000 to examine the determinants of expenditures on goods and services provided through informal outlets. The research reported in this paper adds to a relatively small existing literature on the topic. The empirical analysis is tentatively situated within the context of an Engel curve approach and the influence of informal 'networks' on purchasing behaviour is assessed. Our empirical analysis suggests that the share of purchases from informal markets is inversely related to income and there is a strong role for 'network' effects.