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The Impact of Monopolies on Small Business Development in Russia

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  • L. A. Mierin
  • E. M. Korostyshevskaya
  • N. S. Ragimova

Abstract

The imposition of economic sanctions on Russia by other countries has raised interest rates, diminished the working capital of small and medium‐sized enterprises (SMEs), and led to the restoration of state‐owned companies in many sectors of the economy. Nevertheless, the Russian Federation continues to make efforts to develop a market‐oriented economy based on open competition. This article considers the current situation with SMEs in Russia from the standpoint of market competition and the influence of monopolies on this process. It analyzes bottlenecks in the interaction of monopolies with SMEs. For example, the wires and pipelines required to distribute energy, heat, and electricity over large geographic areas are natural monopolies: only one company can provides each service efficiently in a given area. The companies that control those natural monopolies are able to extract payments far in excess of cost from small businesses. In this and other ways, monopolies are able to dominate the Russian economy and restrict competition from SMEs.

Suggested Citation

  • L. A. Mierin & E. M. Korostyshevskaya & N. S. Ragimova, 2019. "The Impact of Monopolies on Small Business Development in Russia," American Journal of Economics and Sociology, Wiley Blackwell, vol. 78(5), pages 1201-1228, November.
    • Handle: RePEc:bla:ajecsc:v:78:y:2019:i:5:p:1201-1228
    DOI: 10.1111/ajes.12303
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    References listed on IDEAS

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    1. Hayek, F. A. & Caldwell, Bruce, 2007. "The Road to Serfdom," University of Chicago Press Economics Books, University of Chicago Press, number 9780226320540 edited by Caldwell, Bruce, Febrero.
    2. Geginat, Carolin & Ramalho, Rita, 2018. "Electricity connections and firm performance in 183 countries," Energy Economics, Elsevier, vol. 76(C), pages 344-366.
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