Price adjustment under the table: Evidence on efficiency-enhancing corruption

Daniel Levy ()

MPRA Paper from University Library of Munich, Germany

Abstract: Based on first-hand account, this paper offers evidence on price setting and price adjustment mechanisms that were illegally employed under the Soviet planning and rationing regime. The evidence is anecdotal, and is based on personal experience during the years 1960–1971 in the Republic of Georgia. The description of the social organization of the black markets and other illegal economic activities that I offer depicts the creative and sophisticated ways that were used to confront the shortages created by the inefficient centrally-planned command economic price system with its distorted relative prices. The evidence offers a glimpse of quite explicit micro-level evidence on various types of behavior and corruption that were common in Georgia. Rent-seeking behavior, however, led to emergence of remarkably well-functioning and efficiency enhancing black markets. The evidence, thus, underscores once again the role of incentives in a rent-seeking society.

Keywords: Corruption; Black Market; Bribe; Price System; Distorted Relative Prices; USSR; Georgia; Command Economy; Price Setting; Price Adjustment; Cost of Price Adjustment; Menu Cost (search for similar items in EconPapers)
JEL-codes: B14 D30 D73 E64 H26 H40 K42 O17 P20 P26 Z13 (search for similar items in EconPapers)
Date: 2007-01-16
New Economics Papers: this item is included in nep-law and nep-tra
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (28)

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Related works:
Journal Article: Price adjustment under the table: Evidence on efficiency-enhancing corruption (2007)
Journal Article: Price adjustment under the Table: Evidence on Efficiency-Enhancing Corruption (2007)
Working Paper: Price adjustment under the table: Evidence on efficiency-enhancing corruption (2007)
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Persistent link: https://EconPapers.repec.org/RePEc:pra:mprapa:1648

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