An ‘Informal’ Revolution: State–Business Conflict and Institutional Change in Iran

Abstract

This study examines the causes of conflict between the Iranian state and the country's informal economic sectors during the years prior to the 1979 revolution. It adopts an institutionalist approach to argue that the state's introduction of new norms to guide the behaviour of key economic institutions resulted in acute conflict between the state and informal economic sectors. Institutions of credit lending, norms of reputation, and the characteristics of Iran's ‘bazaar sectors’ are examined in detail to substantiate the study's central arguments.