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How Much Control is Enough? Monitoring and Enforcement under Stalin

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  • Markevich, Andrei

    (Department of Economics University of Warwick (Coventry, UK), Centre for Economical and Financial Research, New Economic School (Moscow, Russia) and Interdisciplinary Centre for Studies in History, Economy and Society (Moscow, Russia))

Abstract

Given wide scope for asymmetric information in huge hierarchies agents have a large capacity for opportunistic behaviour. Hidden actions increase transactions costs and cause the demand for monitoring and enforcement. Once the latter are costly, this raises questions about their scope, logistics and type. Using historical records, this paper examines the Stalin’s answers to them. We find that Stalin maximised efficiency of the Soviet system of control but had to mitigate with the problems of the loyalty of inspectors themselves and the necessity to lessen the risk of a “chaos of orders” arising from parallel centres of power.

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File URL: http://www2.warwick.ac.uk/fac/soc/economics/research/workingpapers/2008/twerp_829.pdf
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Bibliographic Info

Paper provided by University of Warwick, Department of Economics in its series The Warwick Economics Research Paper Series (TWERPS) with number 829.

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Length: 37 pages
Date of creation: 2007
Date of revision:
Handle: RePEc:wrk:warwec:829

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Keywords: asymmetric information ; principal-agent problem ; transaction costs ; hierarchy ; USSR;

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References

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  1. Grossman, Sanford J & Hart, Oliver D, 1986. "The Costs and Benefits of Ownership: A Theory of Vertical and Lateral Integration," Journal of Political Economy, University of Chicago Press, vol. 94(4), pages 691-719, August.
  2. Qian, Yingyi, 1994. "Incentives and Loss of Control in an Optimal Hierarchy," Review of Economic Studies, Wiley Blackwell, vol. 61(3), pages 527-44, July.
  3. Andrei Markevich & Mark Harrison, 2006. "Quality, experience, and monopoly: the Soviet market for weapons under Stalin -super-1," Economic History Review, Economic History Society, vol. 59(1), pages 113-142, 02.
  4. Alchian, Armen A & Demsetz, Harold, 1972. "Production , Information Costs, and Economic Organization," American Economic Review, American Economic Association, vol. 62(5), pages 777-95, December.
  5. J. Kornai & E. Maskin & G. Roland., 2004. "Understanding the Soft Budget Constraint," VOPROSY ECONOMIKI, N.P. Redaktsiya zhurnala "Voprosy Economiki", vol. 12.
  6. Hart, Oliver & Moore, John, 1990. "Property Rights and the Nature of the Firm," Journal of Political Economy, University of Chicago Press, vol. 98(6), pages 1119-58, December.
  7. Georgy Egorov & Sergei Guriev & Konstantin Sonin, 2006. "Media Freedom, Bureaucratic Incentives, and the Resource Curse," Working Papers w0063, Center for Economic and Financial Research (CEFIR), revised Jun 2006.
  8. Ronald Wintrobe, 2001. "How to understand, and deal with dictatorship: an economist's view," Economics of Governance, Springer, vol. 3(1), pages 35-58, 03.
  9. Lorenz Blume & Stefan Voigt, 2007. "Supreme Audit Institutions: Supremely Superfluous? A Cross Country Assessment," ICER Working Papers 03-2007, ICER - International Centre for Economic Research.
  10. Kathleen M. Eisenhardt, 1985. "Control: Organizational and Economic Approaches," Management Science, INFORMS, vol. 31(2), pages 134-149, February.
  11. Wintrobe,Ronald, 2000. "The Political Economy of Dictatorship," Cambridge Books, Cambridge University Press, number 9780521794497, October.
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Cited by:
  1. repec:cge:warwcg:34 is not listed on IDEAS
  2. Harrison, Mark, 2013. "The Economics of Coercion and Conflict: an Introduction," CAGE Online Working Paper Series 151, Competitive Advantage in the Global Economy (CAGE).
  3. Harrison, Mark & Zaksauskienė, Inga, 2013. "Counter-Intelligence in a Command Economy," CAGE Online Working Paper Series 170, Competitive Advantage in the Global Economy (CAGE).
  4. Andrei Markevich, 2007. "The Dictator’s Dilemma: to Punish or to Assist? Plan Failures and Interventions under Stalin," Working Papers w0107, Center for Economic and Financial Research (CEFIR).
  5. repec:cge:warwcg:150 is not listed on IDEAS
  6. repec:cge:warwcg:46 is not listed on IDEAS
  7. Harrison, Mark, 2011. "Forging success: Soviet managers and accounting fraud, 1943-1962," Journal of Comparative Economics, Elsevier, vol. 39(1), pages 43-64, March.
  8. repec:cge:warwcg:169 is not listed on IDEAS
  9. Harrison, Mark, 2010. "Forging Success: Soviet Managers and Accounting Fraud, 1943 to 1962," CAGE Online Working Paper Series 34, Competitive Advantage in the Global Economy (CAGE).
  10. Harrison, Mark, 2011. "Secrecy, Fear and Transaction Costs: The Business of Soviet Forced Labour in the Early Cold War," CAGE Online Working Paper Series 47, Competitive Advantage in the Global Economy (CAGE).

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