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How Much Control is Enough? Monitoring and Enforcement under Stalin

  • 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))

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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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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Web page: http://www2.warwick.ac.uk/fac/soc/economics/

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  1. J. Kornai & E. Maskin & G. Roland., 2004. "Understanding the Soft Budget Constraint," VOPROSY ECONOMIKI, N.P. Redaktsiya zhurnala "Voprosy Economiki", vol. 12.
  2. 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.
  3. 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.
  4. Oliver Hart & John Moore, 1988. "Property Rights and the Nature of the Firm," Working papers 495, Massachusetts Institute of Technology (MIT), Department of Economics.
  5. Kathleen M. Eisenhardt, 1985. "Control: Organizational and Economic Approaches," Management Science, INFORMS, vol. 31(2), pages 134-149, February.
  6. repec:cup:cbooks:9780521583299 is not listed on IDEAS
  7. Grossman, Sanford J & Hart, Oliver, 1985. "The Cost and Benefits of Ownership: A Theory of Vertical and Lateral Integration," CEPR Discussion Papers 70, C.E.P.R. Discussion Papers.
  8. 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.
  9. Georgy Egorov & Sergei Guriev & Konstantin Sonin, 2006. "Media Freedom, Bureaucratic Incentives, and the Resource Curse," CEDI Discussion Paper Series 06-10, Centre for Economic Development and Institutions(CEDI), Brunel University.
  10. 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.
  11. repec:cup:cbooks:9780521794497 is not listed on IDEAS
  12. 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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