IDEAS home Printed from https://ideas.repec.org/p/ags/uwarer/269771.html
   My bibliography  Save this paper

Quantity Versus Quality in the Soviet Market for Weapons

Author

Listed:
  • Harrison, Mark
  • Markevich, Andrei

Abstract

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.

Suggested Citation

  • Harrison, Mark & Markevich, Andrei, 2007. "Quantity Versus Quality in the Soviet Market for Weapons," Economic Research Papers 269771, University of Warwick - Department of Economics.
    • Handle: RePEc:ags:uwarer:269771
    DOI: 10.22004/ag.econ.269771
    as

    Download full text from publisher

    File URL: https://ageconsearch.umn.edu/record/269771/files/twerp_822.pdf
    Download Restriction: no
    File URL: https://ageconsearch.umn.edu/record/269771/files/twerp_822.pdf?subformat=pdfa
    Download Restriction: no
    File URL: https://libkey.io/10.22004/ag.econ.269771?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    Other versions of this item:

    References listed on IDEAS

    as
    1. Markevich, Andrei, 2007. "The Dictator’s Dilemma : to Punish or to Assist? Plan Failures and Interventions under Stalin," The Warwick Economics Research Paper Series (TWERPS) 816, University of Warwick, Department of Economics.
    2. Oliver Hart & John Moore, 2008. "Contracts as Reference Points," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 123(1), pages 1-48.
    3. Schmitz, Patrick W, 2001. "The Hold-up Problem and Incomplete Contracts: A Survey of Recent Topics in Contract Theory," Bulletin of Economic Research, Wiley Blackwell, vol. 53(1), pages 1-17, January.
    4. Mark Harrison, 2014. "Soviet Industry and the Red Army Under Stalin: A Military-Industrial Complex?," World Scientific Book Chapters, in: THE ECONOMICS OF COERCION AND CONFLICT, chapter 6, pages 153-173, World Scientific Publishing Co. Pte. Ltd..
    5. R. W. Davies, 1996. "Crisis and Progress in the Soviet Economy, 1931–1933," Palgrave Macmillan Books, Palgrave Macmillan, number 978-1-349-05935-5, December.
    6. R. W. Davies, 1980. "The Industrialisation of Soviet Russia 2," Palgrave Macmillan Books, Palgrave Macmillan, number 978-1-349-04524-2, December.
    7. Gordon, Robert J, 1969. "$45 Billion of U.S. Private Investment Has Been Mislaid," American Economic Review, American Economic Association, vol. 59(3), pages 221-238, June.
    8. Andrei Markevich & Mark Harrison, 2006. "Quality, experience, and monopoly: the Soviet market for weapons under Stalin," Economic History Review, Economic History Society, vol. 59(1), pages 113-142, February.
    9. William P. Rogerson, 1994. "Economic Incentives and the Defense Procurement Process," Journal of Economic Perspectives, American Economic Association, vol. 8(4), pages 65-90, Fall.
    10. Victor P. Goldberg, 1976. "Regulation and Administered Contracts," Bell Journal of Economics, The RAND Corporation, vol. 7(2), pages 426-448, Autumn.
    11. Mark Harrison & R. W. Davies, 1997. "The Soviet military‐economic effort during the second five‐year plan (1933–1937)," Europe-Asia Studies, Taylor & Francis Journals, vol. 49(3), pages 369-406.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Olivier Meier & Aurélie Sannajust, 2021. "The smart contract revolution: a solution for the holdup problem?," Small Business Economics, Springer, vol. 57(2), pages 1073-1088, August.
    2. Dieter Balkenborg & Todd Kaplan & Timothy Miller, 2012. "A Simple Economic Teaching Experiment on the Hold-Up Problem," The Journal of Economic Education, Taylor & Francis Journals, vol. 43(4), pages 377-385, October.
    3. Olivier Meier & Aurélie Sannajust, 0. "The smart contract revolution: a solution for the holdup problem?," Small Business Economics, Springer, vol. 0, pages 1-16.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Andrei Markevich & Mark Harrison, 2006. "Quality, experience, and monopoly: the Soviet market for weapons under Stalin," Economic History Review, Economic History Society, vol. 59(1), pages 113-142, February.
    2. Andrei Markevich, 2011. "How Much Control is Enough? Monitoring and Enforcement under Stalin," Europe-Asia Studies, Taylor & Francis Journals, vol. 63(8), pages 1449-1468.
    3. Harrison, Mark, 2017. "Secrecy and State Capacity: A Look Behind the Iron Curtain," CAGE Online Working Paper Series 312, Competitive Advantage in the Global Economy (CAGE).
    4. Sudhanshu K. MISHRA, 2018. "Globalization under hysteresis: A study of Eastern Bloc Countries, China and India," Journal of Social and Administrative Sciences, KSP Journals, vol. 5(1), pages 46-59, March.
    5. Schmitz, Patrick W., 2010. "Contractual solutions to hold-up problems with quality uncertainty and unobservable investments," Journal of Mathematical Economics, Elsevier, vol. 46(5), pages 807-816, September.
    6. Harrison, Mark, 2011. "Capitalism at War," CAGE Online Working Paper Series 60, Competitive Advantage in the Global Economy (CAGE).
    7. Mark Harrison, 2013. "Secrecy, Fear and Transaction Costs: The Business of Soviet Forced Labour in the Early Cold War," Europe-Asia Studies, Taylor & Francis Journals, vol. 65(6), pages 1112-1135.
    8. Lafond, François & Greenwald, Diana & Farmer, J. Doyne, 2022. "Can Stimulating Demand Drive Costs Down? World War II as a Natural Experiment," The Journal of Economic History, Cambridge University Press, vol. 82(3), pages 727-764, September.
    9. Bernhard Ganglmair, 2008. "Breakup of Repeat Transaction Contracts, Specific Investment, and Efficient Rent-Seeking," JEPS Working Papers 08-001, JEPS.
    10. Valeria Gattai & Piergiovanna Natale, 2017. "A New Cinderella Story: Joint Ventures And The Property Rights Theory Of The Firm," Journal of Economic Surveys, Wiley Blackwell, vol. 31(1), pages 281-302, February.
    11. Stephanie Rosenkranz & Patrick W. Schmitz, 2007. "Can Coasean Bargaining Justify Pigouvian Taxation?," Economica, London School of Economics and Political Science, vol. 74(296), pages 573-585, November.
    12. Surajeet Chakravarty & W. Bentley MacLeod, 2006. "Construction Contracts (or “How to Get the Right Building at the Right Price?”)," CESifo Working Paper Series 1714, CESifo.
    13. Oliver Hart, 2013. "Noncontractible Investments and Reference Points," Games, MDPI, vol. 4(3), pages 1-20, August.
    14. Schmitz, Patrick W., 2021. "On the optimality of outsourcing when vertical integration can mitigate information asymmetries," Economics Letters, Elsevier, vol. 202(C).
    15. Cherry, Barbara A., 2014. "Historical mutilation: How misuse of 'public utility and 'natural monopoly' misdirects US telecommunications policy development," 20th ITS Biennial Conference, Rio de Janeiro 2014: The Net and the Internet - Emerging Markets and Policies 106881, International Telecommunications Society (ITS).
    16. Hsuan-Yu Lin & Chih-Hai Yang, 2016. "Uncertainty, specific investment, and contract duration: evidence from the MLB player market," Empirical Economics, Springer, vol. 50(3), pages 1009-1028, May.
    17. Daniel Agness & Travis Baseler & Sylvain Chassang & Pascaline Dupas & Erik Snowberg, 2022. "Valuing the Time of the Self-Employed," CESifo Working Paper Series 9567, CESifo.
    18. Bester, Helmut, 2013. "Investments and the holdup problem in a matching market," Journal of Mathematical Economics, Elsevier, vol. 49(4), pages 302-311.
    19. B. Boockmann & Paul Thurner, 2006. "Flexibility provisions in multilateral environmental treaties," International Environmental Agreements: Politics, Law and Economics, Springer, vol. 6(2), pages 113-135, June.
    20. Alexander Sebald & Markus Walzl, 2014. "Subjective Performance Evaluations and Reciprocity in Principal–Agent Relations," Scandinavian Journal of Economics, Wiley Blackwell, vol. 116(2), pages 570-590, April.

    More about this item

    Keywords

    International Development; Production Economics;

    JEL classification:

    • L2 - Industrial Organization - - Firm Objectives, Organization, and Behavior
    • N4 - Economic History - - Government, War, Law, International Relations, and Regulation
    • P2 - Political Economy and Comparative Economic Systems - - Socialist and Transition Economies

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:ags:uwarer:269771. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: AgEcon Search (email available below). General contact details of provider: https://warwick.ac.uk/fac/soc/economics/research/workingpapers/ .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.