Coercion, compliance and the collapse of the soviet command economy
AbstractAre command systems that rest on coercion inherently unstable, and did the Soviet economy collapse for this reason? Postwar evidence is inconsistent with the hypothesis that the Soviet economy was unstable. If it was not unstable, why did it collapse? A repeated game of coordination between a dictator and producers shows that a high level of coercion may yield a stable high–output equilibrium, that the command economy contains a time–consistency problem for central planners, and that a transition to a low state of coercion and performance in which everyone’s income falls may be brought about by rising monitoring costs and the dictator’s loss of reputation. The facts of the Soviet case are consistent with a collapse triggered when the dictator threw in the towel.
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Bibliographic InfoPaper provided by University of Warwick, Department of Economics in its series The Warwick Economics Research Paper Series (TWERPS) with number 602.
Length: 39 pages
Date of creation: 2001
Date of revision:
COMMAND ; ECONOMY ; DICTATORSHIP ; INCENTIVES ; MONITORING ; SOVIET UNION ; TIME–CONSISTENCY;
Find related papers by JEL classification:
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- D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design
- P21 - Economic Systems - - Socialist Systems and Transition Economies - - - Planning, Coordination, and Reform
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- Crafts, Nicholas & Toniolo, Gianni, 2008. "European Economic Growth, 1950-2005: An Overview," CEPR Discussion Papers 6863, C.E.P.R. Discussion Papers.
- Valery Lazarev, 2004. "Political Rents, Promotion Incentives, and Support for a Non-Democratic Regime," Working Papers 882, Economic Growth Center, Yale University.
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