The transition to a market economy and some features of industrial organization in Russia

This thesis consists of three main chapters addressing microeconomic issues of the transition from a centrally planned to a market-coordinated economy in Russia.; The first chapter is devoted to explaining the U-shaped trajectory of output observed in most East European economies during the period of transition. This work was inspired by a study by Oliver Blanchard (1996). I use similar assumptions but a different structure of the model, in an attempt to provide a more realistic explanation for the stylized facts observed in the transitional economies. Following Blanchard (1996), my model presumes both the presence of private information on the part of some agents and a limited functioning of the market. A theoretical analysis and several numerical examples are used to investigate a variety of factors affecting the dynamic of output during the transition, such as changes in the structure of demand, uncertainty and foreign competition.; In the second chapter, I analyse the microeconomic behaviour of enterprises in the post-communist economy. I use models of monopoly and monopsony with government intervention and arrears to explain numerous difficulties encountered by Russia during the economic transition. The presence of governmental subsidization and the uncertainty of payment delivery partially explain some of the properties and shortcomings of the transitional period.; In the third chapter, I discuss the implications of the current state of corporate governance for the Russian economy and for the future of reforms. While current literature on transitional economies is concerned mostly with those characteristics of Russian managers inherited from their past, I concentrate here on features of the transition itself in order to explain their behaviour. I am using a modified model of corporate takeovers introduced by Grossman and Hart (1980) in order to explain some stylized facts about the state of corporate governance in Russia. I conclude that there is a self-perpetuating cycle of bad corporate governance contributing to the poor state of the economy currently in place in the country.