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Transition to Market Economy in Eastern Europe

Research output: Working paperResearch

  • Department of Economics
Because the transition to democracy in 1989 was a non-violent "velvet revolution", the old state monopolies were not removed. State monopolies have small-group advantages in contrast to the large group of private firms which are numerous and not yet organized. In the case of Russia, the numerous and small private firms were not capable of cooperating, nor were the military and the foreign trade lobbies due to internal competition and large numbers, respectively. In contrast, the energy and agrarian lobbies maintained their subsidies by cooperating and acting as allies and non-competitors. Free trade with the West and potential competition may mobilize popular support in favor of privatization and put pressure on the old state monopolies. However, lobbies in the European Union (EU) may oppose free trade to maintain their monopoly and to avoid competion for the Structural Funds in the EU.
Original languageEnglish
Publication statusPublished - 1998

    Research areas

  • Transition economies, Eastern Europe, Public choice, Lobbyism, Free trade, EU, Structural Funds, Agriculture, Rational ignorance, Group size

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