Quantity Versus Quality in the Soviet Market for Weapons
Military market places display obvious inefficiencies under most arrangements, but the Soviet defense market was unusual for its degree of monopoly, exclusive relationships, intensely scrutinized (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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- Andrei Markevich, 2007.
"The Dictator’s Dilemma: to Punish or to Assist? Plan Failures and Interventions under Stalin,"
w0107, Center for Economic and Financial Research (CEFIR).
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Bulletin of Economic Research,
Wiley Blackwell, vol. 53(1), pages 1-17, January.
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- Oliver Hart & John Moore, 2008. "Contracts as Reference Points," The Quarterly Journal of Economics, Oxford University Press, vol. 123(1), pages 1-48.
- 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.
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