Advanced Search
MyIDEAS: Login to save this paper or follow this series

Price adjustment under the table: Evidence on efficiency-enhancing corruption

Contents:

Author Info

  • Levy, Daniel

Abstract

Based on first-hand account, this paper offers evidence on price setting and price adjustment mechanisms that were illegally employed under the Soviet planning and rationing regime. The evidence is anecdotal, and is based on personal experience during the years 1960–1971 in the Republic of Georgia. The description of the social organization of the black markets and other illegal economic activities that I offer depicts the creative and sophisticated ways that were used to confront the shortages created by the inefficient centrally-planned command economic price system with its distorted relative prices. The evidence offers a glimpse of quite explicit micro-level evidence on various types of behavior and corruption that were common in Georgia. Rent-seeking behavior, however, led to emergence of remarkably well-functioning and efficiency enhancing black markets. The evidence, thus, underscores once again the role of incentives in a rent-seeking society.

Download Info

If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
File URL: http://mpra.ub.uni-muenchen.de/1648/
File Function: original version
Download Restriction: no

Bibliographic Info

Paper provided by University Library of Munich, Germany in its series MPRA Paper with number 1648.

as in new window
Length:
Date of creation: 16 Jan 2007
Date of revision:
Handle: RePEc:pra:mprapa:1648

Contact details of provider:
Postal: Schackstr. 4, D-80539 Munich, Germany
Phone: +49-(0)89-2180-2219
Fax: +49-(0)89-2180-3900
Web page: http://mpra.ub.uni-muenchen.de
More information through EDIRC

Related research

Keywords: Corruption; Black Market; Bribe; Price System; Distorted Relative Prices; USSR; Georgia; Command Economy; Price Setting; Price Adjustment; Cost of Price Adjustment; Menu Cost;

Other versions of this item:

Find related papers by JEL classification:

This paper has been announced in the following NEP Reports:

References

References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
as in new window
  1. Paldam, Martin, 2002. "The cross-country pattern of corruption: economics, culture and the seesaw dynamics," European Journal of Political Economy, Elsevier, Elsevier, vol. 18(2), pages 215-240, June.
  2. Daniel Levy & Dongwon Lee & Haipeng (Allan) Chen & Robert J. Kauffman & Mark Bergen, 2011. "Price Points and Price Rigidity," The Review of Economics and Statistics, MIT Press, vol. 93(4), pages 1417-1431, November.
  3. Ludwig, Jens & Kling, Jeffrey R., 2006. "Is Crime Contagious?," IZA Discussion Papers 2213, Institute for the Study of Labor (IZA).
  4. Reto Foellmi & Manuel Oechslin, . "Who Gains From Non-Collusive Corruption?," IEW - Working Papers, Institute for Empirical Research in Economics - University of Zurich 142, Institute for Empirical Research in Economics - University of Zurich.
  5. William Easterly, 2002. "The Elusive Quest for Growth: Economists' Adventures and Misadventures in the Tropics," MIT Press Books, The MIT Press, The MIT Press, edition 1, volume 1, number 0262550423, December.
  6. Mark J. Zbaracki & Mark Bergen & Daniel Levy, 2006. "The Anatomy of a Price Cut: Discovering Organizational Sources of the Costs of Price Adjustment," Emory Economics, Department of Economics, Emory University (Atlanta) 0610, Department of Economics, Emory University (Atlanta).
  7. Daniel Levy & Mark Bergen, 2005. "Simulating a Multiproduct Barter Exchange Economy," Experimental, EconWPA 0505002, EconWPA.
  8. Small, Deborah A & Loewenstein, George, 2003. " Helping a Victim or Helping the Victim: Altruism and Identifiability," Journal of Risk and Uncertainty, Springer, Springer, vol. 26(1), pages 5-16, January.
  9. Dutta, Shantanu & Bergen, Mark & Levy, Daniel, 2002. "Price flexibility in channels of distribution: Evidence from scanner data," Journal of Economic Dynamics and Control, Elsevier, Elsevier, vol. 26(11), pages 1845-1900, September.
  10. Romer, Christina D. & Romer, David H., 1994. "Monetary policy matters," Journal of Monetary Economics, Elsevier, Elsevier, vol. 34(1), pages 75-88, August.
  11. Mark Zbaracki & Mark Ritson & Daniel Levy & Shantanu Dutta & Mark Bergen, 2004. "Managerial and Customer Costs of Price Adjustment: Direct Evidence from Industrial Markets," Macroeconomics, EconWPA 0402020, EconWPA.
  12. Andrei Shleifer & Robert Vishny, 1991. "Pervasive Shortages Under Socialism," NBER Working Papers 3791, National Bureau of Economic Research, Inc.
  13. Aidt, Toke & Jayasri Dutta, 2002. "Policy compromises: corruption and regulation in a dynamic democracy," Royal Economic Society Annual Conference 2002, Royal Economic Society 1, Royal Economic Society.
  14. Blackburn, Keith & Bose, Niloy & Emranul Haque, M., 2006. "The incidence and persistence of corruption in economic development," Journal of Economic Dynamics and Control, Elsevier, Elsevier, vol. 30(12), pages 2447-2467, December.
  15. Daniel Levy & Andrew Young, 2004. ""The Real Thing:" Nominal Price Rigidity of the Nickel Coke, 1886-1959," Emory Economics, Department of Economics, Emory University (Atlanta) 0405, Department of Economics, Emory University (Atlanta).
  16. Hillman, Arye L. & Schnytzer, Adi, 1986. "Illegal economic activities and purges in a Soviet-type economy: A rent-seeking perspective," International Review of Law and Economics, Elsevier, Elsevier, vol. 6(1), pages 87-99, June.
  17. Marjit, Sugata & Mukherjee, Vivekananda & Mukherjee, Arijit, 2000. "Harassment, corruption and tax policy," European Journal of Political Economy, Elsevier, Elsevier, vol. 16(1), pages 75-94, March.
  18. Harold Fried & Daniel Levy, 2005. "Beans as a Medium of Exchange," General Economics and Teaching, EconWPA 0505001, EconWPA.
  19. Beck, Paul J. & Maher, Michael W., 1986. "A comparison of bribery and bidding in thin markets," Economics Letters, Elsevier, Elsevier, vol. 20(1), pages 1-5.
  20. Gupta, Sanjeev & de Mello, Luiz & Sharan, Raju, 2001. "Corruption and military spending," European Journal of Political Economy, Elsevier, Elsevier, vol. 17(4), pages 749-777, November.
  21. Reinikka, Ritva & Svensson, Jakob, 2002. "Explaining Leakage of Public Funds," CEPR Discussion Papers, C.E.P.R. Discussion Papers 3227, C.E.P.R. Discussion Papers.
  22. Toke S. Aidt, 2003. "Economic analysis of corruption: a survey," Economic Journal, Royal Economic Society, Royal Economic Society, vol. 113(491), pages F632-F652, November.
  23. Daniel Levy & Shantanu Dutta & Mark Bergen, 2004. "Heterogeneity in Price Rigidity: Evidence from a Case Study Using Micro-Level Data," Macroeconomics, EconWPA 0402021, EconWPA.
  24. Dutta, Shantanu, et al, 1999. "Menu Costs, Posted Prices, and Multiproduct Retailers," Journal of Money, Credit and Banking, Blackwell Publishing, Blackwell Publishing, vol. 31(4), pages 683-703, November.
  25. Martin L. Weitzman, 1977. "Is the Price System or Rationing More Effective in Getting a Commodity to Those Who Need It Most?," Bell Journal of Economics, The RAND Corporation, The RAND Corporation, vol. 8(2), pages 517-524, Autumn.
  26. Levy, Daniel & Chen, Haipeng (Allan) & Ray, Sourav & Bergen, Mark, 2006. "Asymmetric Price Adjustment in the Small," MPRA Paper 1097, University Library of Munich, Germany.
  27. McCloskey, Donald N, 1983. "The Rhetoric of Economics," Journal of Economic Literature, American Economic Association, American Economic Association, vol. 21(2), pages 481-517, June.
  28. Mendez, Fabio & Sepulveda, Facundo, 2006. "Corruption, growth and political regimes: Cross country evidence," European Journal of Political Economy, Elsevier, Elsevier, vol. 22(1), pages 82-98, March.
  29. Pranab Bardhan, 1997. "Corruption and Development: A Review of Issues," Journal of Economic Literature, American Economic Association, American Economic Association, vol. 35(3), pages 1320-1346, September.
  30. Treisman, Daniel, 2000. "The causes of corruption: a cross-national study," Journal of Public Economics, Elsevier, Elsevier, vol. 76(3), pages 399-457, June.
  31. Daniel Levy & Mark Bergen & Shantanu Dutta & Robert Venable, 2005. "The Magnitude of Menu Costs: Direct Evidence from Large U.S. Supermarket Chains," Macroeconomics, EconWPA 0505012, EconWPA.
  32. Lien, Da-Hsiang Donald, 1986. "A note on competitive bribery games," Economics Letters, Elsevier, Elsevier, vol. 22(4), pages 337-341.
  33. Hillman, Arye L. & Ursprung, Heinrich W., 2000. "Political culture and economic decline," European Journal of Political Economy, Elsevier, Elsevier, vol. 16(2), pages 189-213, June.
  34. Glaeser, Edward L. & Saks, Raven E., 2006. "Corruption in America," Journal of Public Economics, Elsevier, Elsevier, vol. 90(6-7), pages 1053-1072, August.
  35. Hillman, Arye L., 2004. "Corruption and public finance: an IMF perspective," European Journal of Political Economy, Elsevier, Elsevier, vol. 20(4), pages 1067-1077, November.
  36. Daniel Levy & Shantanu Dutta & Mark Bergen & Robert Venable, 1998. "Price adjustment at multiproduct retailers," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 19(2), pages 81-120.
  37. Durlauf, Steven N., 2001. "Manifesto for a growth econometrics," Journal of Econometrics, Elsevier, Elsevier, vol. 100(1), pages 65-69, January.
  38. Bergson, Abram, 1984. "Income Inequality under Soviet Socialism," Journal of Economic Literature, American Economic Association, American Economic Association, vol. 22(3), pages 1052-99, September.
  39. Raymond Fisman & Edward Miguel, 2006. "Cultures of Corruption: Evidence From Diplomatic Parking Tickets," NBER Working Papers 12312, National Bureau of Economic Research, Inc.
  40. Lui, Francis T, 1985. "An Equilibrium Queuing Model of Bribery," Journal of Political Economy, University of Chicago Press, University of Chicago Press, vol. 93(4), pages 760-81, August.
  41. Aidt, T. & Dutta, J. & Vania Sena, 2005. "Growth, Governance and Corruption in the Presence of Threshold Effects: Theory and Evidence," Cambridge Working Papers in Economics, Faculty of Economics, University of Cambridge 0540, Faculty of Economics, University of Cambridge.
  42. Anders Åslund & Peter Boone & Simon Johnson, 1996. "How to Stabilize: Lessons from Post -communist Countries," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 27(1), pages 217-314.
  43. Paolo Mauro, 1996. "The Effects of Corruptionon Growth, Investment, and Government Expenditure," IMF Working Papers 96/98, International Monetary Fund.
  44. Herzfeld, Thomas & Weiss, Christoph, 2003. "Corruption and legal (in)effectiveness: an empirical investigation," European Journal of Political Economy, Elsevier, Elsevier, vol. 19(3), pages 621-632, September.
  45. Hillman, Arye L. & Katz, Eliakim, 1987. "Hierarchical structure and the social costs of bribes and transfers," Journal of Public Economics, Elsevier, Elsevier, vol. 34(2), pages 129-142, November.
  46. Hillman, Arye L., 2002. "The World Bank and the persistence of poverty in poor countries," European Journal of Political Economy, Elsevier, Elsevier, vol. 18(4), pages 783-795, November.
  47. Levin, Mark & Satarov, Georgy, 2000. "Corruption and institutions in Russia," European Journal of Political Economy, Elsevier, Elsevier, vol. 16(1), pages 113-132, March.
  48. Mauro, Paolo, 1995. "Corruption and Growth," The Quarterly Journal of Economics, MIT Press, MIT Press, vol. 110(3), pages 681-712, August.
Full references (including those not matched with items on IDEAS)

Citations

Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
as in new window

Cited by:
  1. Kodila Tedika, Oasis, 2012. "Consequences De La Corruption : Panorama Empirique
    [Consequences of Corruption : Empirical survey]
    ," MPRA Paper 41482, University Library of Munich, Germany.
  2. Campos, Nauro F & Dimova, Ralitza & Saleh, Ahmad, 2010. "Whither Corruption? A Quantitative Survey of the Literature on Corruption and Growth," IZA Discussion Papers 5334, Institute for the Study of Labor (IZA).
  3. Pál Csapodi & István Takács & Katalin György-Takács, 2011. "Corruption as a Deviant Social Attitude," Public Finance Quarterly, State Audit Office of Hungary, State Audit Office of Hungary, vol. 56(1), pages 27-43.
  4. Noel D., Johnson & William, Ruger & Jason, Sorens & Steven, Yamarik, 2012. "Corruption as a response to regulation," MPRA Paper 36873, University Library of Munich, Germany.
  5. Noel Johnson & William Ruger & Jason Sorens & Steven Yamarik, 2014. "Corruption, regulation, and growth: an empirical study of the United States," Economics of Governance, Springer, Springer, vol. 15(1), pages 51-69, February.
  6. Aidt, T.S., 2009. "Corruption, Institutions and Economic Development," Cambridge Working Papers in Economics, Faculty of Economics, University of Cambridge 0918, Faculty of Economics, University of Cambridge.
  7. Aidt, T.S., 2010. "Corruption and Sustainable Development," Cambridge Working Papers in Economics, Faculty of Economics, University of Cambridge 1061, Faculty of Economics, University of Cambridge.

Lists

This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

Statistics

Access and download statistics

Corrections

When requesting a correction, please mention this item's handle: RePEc:pra:mprapa:1648. See general information about how to correct material in RePEc.

For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Ekkehart Schlicht).

If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

If references are entirely missing, you can add them using this form.

If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.

If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

Please note that corrections may take a couple of weeks to filter through the various RePEc services.