The paper shows how, when the enforceability of regulations is size-sensitive, price competition can lock firms into informality and, thus, smallness, depending on the form of the production function. In that context, exogenous help packages targeted to informal firms promote micro and small enterprises (i.e., increase their numbers) but do not develop them (i.e., foster their growth). The help only generates a short-term span of abnormal profits for existing informal firms, and a long-term income transfer toward informal-market consumers. The model is tested in the context of Egypt\u27s micro and small enterprise sector
