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Prices, Planners, and Producers: an Agency Problem in Soviet Industry, 1928–1950

Published online by Cambridge University Press:  03 March 2009

Mark Harrison
Mark Harrison
Affiliation:
Professor of Economics, University of Warwick, Coventry CV4 7AL, England.
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Abstract

Soviet planners developed the “unchanged prices of 1926/27” to facilitate the solution of an agency problem—the regulation of self-interested producers as they worked to fulfill plans for heterogeneous products denominated in rubles. The system limited but did not eliminate producers' opportunistic behavior, which took the form of inflating the plan prices of new products. Through the 1930s and 1940s the “unchanged” prices proved resistant to reform, and following their abolition in 1950 the system was soon afterwards reinstated with a new base year. The history of the “unchanged” prices illustrates the limits of command.

Type
Articles
Information
The Journal of Economic History , Volume 58 , Issue 4 , December 1998 , pp. 1032 - 1062
Copyright
Copyright © The Economic History Association 1998

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