Introduction 
The study of the structure of the informal economy in religious cities is among the emerging fields in urban and economic research. Understanding the structural functions of this type of economy within the context of religious cities in Iran and comparing it with similar examples in other countries can provide the foundation for more systematic management planning in this area. The present study is considered novel regarding its methodology and comparative approach to examining the informal economy in religious cities of two countries. Its innovation lies in analysing the structure of the informal economy in two major religious cities—Mashhad in Iran and Karbala in Iraq—using the Grounded Theory method. The main objective of this research is to identify the differences and similarities in the informal economy of religious cities in Iran and Iraq, and to explain the structural systems of subsistence economies based on street vending around pilgrimage sites. Accordingly, this comparative study examines the structure of the informal economy based on street vending in the vicinity of Imam Reza’s shrine in Mashhad and Imam Sadiq’s market in Karbala, interpreting their functional characteristics. Based on this, the central research question is formulated as follows:
“How has the comparative structure of the informal economy based on street vending in the cities of Mashhad and Karbala been formed, and what functional similarities and differences exist between them? “This study, relying on the theoretical framework of the informal economy and a phenomenological methodology, seeks to comparatively examine the experiences, structures, and economic practices of street vendors in these two cities through a contextual, grounded approach.
Materials and Methods
The research methodology of the present study is qualitative, based on an interpretive phenomenological approach. Data collection was conducted through fieldwork using semi-structured interviews and environmental observation (lived experience). The target population includes mobile street vendors operating in and around the religious marketplaces of the studied cities. A sample of 50 participants was selected through convenience sampling, comprising 30 vendors in Mashhad and 20 in Karbala. The geographical scope of the study includes Imam Sadiq Market in Karbala, Iraq, and Reza Market (Imam Reza) in Mashhad, Iran. These two cities were selected based on their shared characteristics, such as hosting large numbers of Iranian pilgrims and the high volume of commodity exchange in the area. Given the seasonal influx of pilgrims in both cities, the temporal scope of the study was defined as follows: Imam Sadiq Market in Karbala was studied during February 2025, while Imam Reza Market in Mashhad was observed in Summer 2024. Data analysis followed a grounded theory approach, incorporating open, axial, and selective coding, ultimately forming comparative categories. The study’s validity was ensured through theoretical saturation: data collection was discontinued once recurring responses emerged and no new information was obtained, leading to the classification and organisation of the gathered data.
Findings
Given the level of field observation and the time limitations during data collection in the cities of Karbala (Iraq) and Mashhad (Iran), the findings derived from the extracted codes and categories, along with continuous environmental observation and lived experience within the studied marketplaces, reveal the following comparative insights regarding the street vending system in both cities: The street vending economy in both Karbala and Mashhad is characterized as a subsistence economy heavily dependent on wholesalers, and primarily aimed at meeting the daily needs of vendors’ households. However, in Karbala, this economic activity is more individual-centred, mainly due to the younger age profile of the vendors. Street vendors in both cities generally belong to lower-income social classes, residing in marginalized and underprivileged urban areas, with complete income dependency on street vending as their primary livelihood.
Both cities’ product quality and market environment are typically based on low-cost, low-quality goods, often stagnant or surplus items. The appeal of these markets to customers lies in affordable prices, bargaining opportunities, and the ability for pilgrims to purchase souvenirs in bulk. In Mashhad, the merchandise sold by street vendors is mainly locally produced or imported from China, often sourced from nearby manufacturing workshops and local producers. In contrast, Karbala’s street vending relies more heavily on imported low-quality goods from countries such as China, Turkey, Iran, and, to a lesser extent, Iraqi domestic production or Gulf countries (under Arabic branding). The customer base for street vending in both cities comprises religious pilgrims (tourists). In Mashhad, this group is primarily domestic (Iranian), whereas in Karbala, most customers are international pilgrims, particularly from Iran, Pakistan, Afghanistan, and Azerbaijan, with Iranians forming the largest segment. The urban environment quality in Mashhad is relatively well-organized, benefiting from urban design initiatives, while Karbala’s market environment is disorganized, overcrowded, and suffers from poor sanitation and infrastructure. The distribution and sales system in both cities is structurally similar. However, in Mashhad, the system is more decentralized, with multiple wholesalers and middlemen, whereas Karbala’s system is centralized and controlled by a limited number of wholesalers and formal shopkeepers. The relationship between street vendors and formal retailers in Mashhad is characterized by interdependence, as many formal retailers allow vendors to sell unsold or stagnant goods, although tensions occasionally arise. In Karbala, however, vendor-retailer relations are shaped by tribal and familial networks, generally resulting in more cooperative interactions. The payment and transaction systems also differ. In Mashhad, transactions are made through cash or card (debit machines) in both Iranian Rial and foreign currency. In contrast, in Karbala, payments are conducted exclusively in cash, with Iraqi Dinar, Iranian Rial, and US Dollars being the common currencies. Urban management approaches in both cities rely heavily on coercive strategies to control street vending. In Mashhad, however, there is a gradual trend toward regulation and spatial allocation, aiming to organize and integrate vendors. Conversely, in Karbala, enforcement remains strictly punitive, often carried out by local police (Shurtah) through direct removal and crackdowns.
Conclusion
The final results of this study indicate that the functional structure of street vendors in the religious cities of Iran and Iraq (specifically Mashhad and Karbala) at the end-point of the supply chain (i.e., the street vendors themselves) is essentially similar, as they operate in continuous interaction with both formal retailers and customers. Despite the political, economic, and social differences between Iran and Iraq, the functional pattern of street vending exhibits a shared model with limited variations. These variations primarily stem from differences in the age structure of vendors, the influence of tribal and clan systems, dependency and market monopolies, environmental quality, spatial allocation, and the type of goods sold. Given the focus of this research on the comparative functional structure of street vendors, it is recommended that future studies address other dimensions of street vending, such as the functional networks, supply chains, and distribution systems. These aspects should be examined through fundamental and applied research within academic frameworks to better elucidate the underlying economic flows.