Working Paper
Enforcement and Compliance in Lima's Street Markets

the Origins and Consequences of Policy Incoherence Toward Informal Traders

Almost twenty years have passed since researchers from the Institute for Liberty and Democracy in Peru showed how ‘bad laws’ impose disproportionate costs on those who choose formality. Although a multitude of conflicting regulations still precludes effective governance of informal trade in Lima, this paper argues that the sources of those conflicts are more diverse – though perhaps more tractable – than they might have been twenty years ago. Specifically, the paper identifies three sources of policy incoherence in Lima that contribute to persistent clashes between informal workers and policy makers: (1) the lack of definitional clarity in national and metropolitan-level legislation; (2) the absence of reliable mechanisms designed to resolve those definitional contradictions; and (3) a resulting lack of policy continuity over time within individual municipal administrations.