Pervasive Shortages Under Socialism

Andrei Shleifer and Robert Vishny

No 3791, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: We present a new theory of pervasive shortages under socialism, based on the assumption that the planners are self-interested. Because the planners -- meaning bureaucrats in the ministries and managers of firms -- cannot keep the official profits that firms earn, it is in their interest to create shortages of output and to collect bribes from the rationed consumers. Unlike official profits, bribes are not turned over to the state, and so shortages enable the key decision makers who collect them to profit personally. The theory suggests that an increase in the official price of a good might reduce output. The theory also suggests that market socialism is bound to fail even without computational complexities facing the planners.

Date: 1991-07
References: Add references at CitEc
Citations: View citations in EconPapers (1)

Published as RAND Journal of Economics, 1992, vol. 23, issue 2, pages 237-246

Downloads: (external link)
http://www.nber.org/papers/w3791.pdf (application/pdf)

Related works:
Journal Article: Pervasive Shortages under Socialism (1992)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:nbr:nberwo:3791

Ordering information: This working paper can be ordered from
http://www.nber.org/papers/w3791

Access Statistics for this paper

More papers in NBER Working Papers from National Bureau of Economic Research, Inc National Bureau of Economic Research, 1050 Massachusetts Avenue Cambridge, MA 02138, U.S.A.. Contact information at EDIRC.
Bibliographic data for series maintained by ().