Quantity Versus Quality in the Soviet Market for Weapons
AbstractMilitary market places display obvious inefficiencies under most arrangements, but the Soviet defense market was unusual for its degree of monopoly, exclusive relationships, and intense scrutiny (in its formative years) by a harsh dictator. This provided the setting for quality versus quantity in the delivery of weapons to the government. The paper discusses the power of the industrial contractor over the defense buyer in terms of a hold-up problem. The typical use that the contractor made of this power was to default on quality. The defense ministry’s counter-action took the form of deploying agents through industry with the authority to verify quality and reject substandard goods. The final compromise restored quality at the expense of quantity. Being illicit, it had to be hidden from the dictator.
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Bibliographic InfoPaper provided by Center for Economic and Financial Research (CEFIR) in its series Working Papers with number w0109.
Length: 23 pages
Date of creation: Nov 2007
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Contracts; Dictatorship; Hold-Up Problem; Soviet Economy;
Other versions of this item:
- Harrison, Mark & Markevich, Andrei, 2007. "Quantity Versus Quality in the Soviet Market for Weapons," The Warwick Economics Research Paper Series (TWERPS) 822, University of Warwick, Department of Economics.
- L2 - Industrial Organization - - Firm Objectives, Organization, and Behavior
- N4 - Economic History - - Government, War, Law, International Relations, and Regulation
- P2 - Economic Systems - - Socialist Systems and Transition Economies
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