Harrison, Mark, 1949- and Markevich, Andreĭ, 1976- (2007) Quantity versus quality in the Soviet market for weapons. Working Paper. Coventry: University of Warwick, Department of Economics. (Warwick economic research papers.

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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.

Item Type:	Working or Discussion Paper (Working Paper)
Subjects:	H Social Sciences > HC Economic History and Conditions D History General and Old World > DK Russia. Soviet Union. Former Soviet Republics U Military Science > U Military Science (General)
Divisions:	Faculty of Social Sciences > Economics
Library of Congress Subject Headings (LCSH):	Military weapons -- Soviet Union, Weapons industry -- Soviet Union, Defense industries -- Soviet Union, Commercial law -- Soviet Union, Soviet Union -- History, Military, Soviet Union -- Economic conditions
Series Name:	Warwick economic research papers
Publisher:	University of Warwick, Department of Economics
Place of Publication:	Coventry
Date:	12 November 2007
Number:	No.822
Number of Pages:	23
Status:	Not Peer Reviewed
Access rights to Published version:	Open Access
Funder:	Fifth Framework Programme (European Commission) (FP5), Hoover Institution on War, Revolution, and Peace
References:	Archival Collections GARF. State Archive of the Russian Federation (Gosudarstvennyi Arkhiv Rossiiskoi Federatsii), Moscow. Hoover/RGANI. Hoover Institution (Stanford, California), documents from the Russian State Archive of Recent History (Rossiiskii Gosudarstvennyi Arkhiv Noveishei Istorii), Moscow. RGAE. Russian State Economic Archive (Rossiiskii Gosudarstvennyi Arkhiv Ekonomiki), Moscow. Published Works Albrecht, Ulrich. 1993. The Soviet Armaments Industry. Chur (Switzerland): Harwood Academic Publishers, Alexander, Arthur J. 1978. Decision Making in Soviet Weapons Procurement. Adelphi Paper no. 147 8. London: International Institute for Strategic Studies. Almquist, Peter. 1990. Red Forge: Soviet Military Industry Since 1965. New York: Columbia University Press. Berliner, Joseph S. 1957. Factory and Manager in the USSR. Cambridge, MA: Harvard University Press. Davies, R. W. 1989. The Industrialisation of Soviet Russia, vol. 3: The Soviet Economy in Turmoil, 1929-1930. Basingstoke (England): Macmillan. Davies, R. W. 1996. The Industrialisation of Soviet Russia, vol. 4: Crisis and Progress in the Soviet Economy, 1931-1933. Basingstoke (England): Macmillan. Davies, R. W., and Mark Harrison. 1997. The Soviet Military-Economic Effort under the Second Five-Year Plan (1933-1937). Europe-Asia Studies 49(3): 369-406. Eloranta, Jari. 2008. Rent Seeking and Collusion in the Military Allocation Decisions of Finland, Sweden, and the UK, 1920-1938. Forthcoming in the Economic History Review,. Goldberg, Victor P. 1976. Regulation and Administered Contracts. Bell Journal of Economics 7(2): 426-52. Gordon, Robert J. 1969. $45 Billion of U.S. Private Investment Has Been Mislaid. American Economic Review 59(3): 221-38. Granick, David. 1954. Management of the Industrial Firm in the USSR. New York: Columbia University Press. Harrison, Mark. 2003. Soviet Industry and the Red Army Under Stalin: A Military-Industrial Complex? Les Cahiers du Monde russe 44(2-3): 323-42. Harrison, Mark, and Nikolai Simonov. 2000. "Voenpriemka: Prices, Costs, and Quality Assurance in Interwar Defence Industry." In The Soviet Defence-Industry Complex From Stalin to Khrushchev: 223-45. Edited by John Barber and Mark Harrison. Basingstoke (England): MacMillan. Hart, Oliver, and John Moore. 2006. Contracts as Reference Points. Harvard University and the University of Edinburgh. Holloway, David. 1982. Innovation in the Defence Sector. In Industrial Innovation in the Soviet Union: 276-367. Edited by Ronald Amann and Julian Cooper. New Haven, CT: Yale University Press. Markevich, Andrei. 2007. "The Dictator’s Dilemma: to Punish or to Assist? Plan Failures and Interventions under Stalin." PERSA Working Paper no. 51. University of Warwick, Department of Economics. Markevich, Andrei. 2008. Planning the Supply of Weapons: the 1930s. In Guns and Rubles: The Defense Industry in the Stalinist State. Edited by Mark Harrison. New Haven, CT: Hoover Institution and Yale University Press. Markevich, Andrei, and Mark Harrison. 2006. Quality, Experience, and Monopoly: the Soviet Market for Weapons Under Stalin. Economic History Review 59(1): 113-42. Rogerson, William P. 1994. "Economic Incentives and the Defense Procurement Process." Journal of Economic Perspectives 8(4): 65-90. Samuelson, Lennart. 2000. Plans for Stalin's War Machine: Tukhachevskii and Military-Economic Planning, 1925-41. London and Basingstoke: Macmillan. Schmitz, Patrick W. 2001. "The Hold-Up problem and Incomplete Contracts: A Survey of Recent Topics in Contract Theory." Bulletin of Economic Research 53(1): 1-17. Sokolov, Andrei. 2008. Before Stalinism: the Early 1920s. In Guns and Rubles: The Defense Industry in the Stalinist State. Edited by Mark Harrison. New Haven, CT: Hoover Institution and Yale University Press. Williamson, Oliver E. 1985. The Economic Institutions of Capitalism. New York: The Free Press
URI:	http://wrap.warwick.ac.uk/id/eprint/1394

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