Quality, experience, and monopoly: the Soviet market for weapons under Stalin

Authors

  • ANDREI MARKEVICH,

    1. Open Lyceum, All Russian External Multi-Disciplinary School, Moscow State University
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  • MARK HARRISON

    1. Department of Economics, University of Warwick, Centre for Russian & East European Studies, University of Birmingham and Hoover Institution on War, Revolution, and Peace, Stanford University
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SUMMARY

Monopoly is a particular problem in markets where experience goods are traded, since the consumer cannot respond to bad experiences by switching repeat purchases to another supplier. New evidence shows how the defence ministry as buyer in the Soviet market for military goods responded to this problem by investing in an evaluation of quality prior to purchase, by showing reluctance to buy, and by exploiting the available non-market means to influence the defence industry as supplier. The effectiveness of these stratagems was limited by the defence industry's counteractions and because the buyer had no choice but to come to a compromise with the supplier.

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