BOFIT Discussion Papers, Institute for Economies in Transition, Bank of Finland
No 10/2000:
A Model of Russia’s "Virtual Economy"
R. E. Ericson ()
and B. W. Ickes ()
Abstract: The Russian Economy has evolved into a hybrid form, a
partially monetized quasi-market system that has been called the virtual
economy. In the virtual economy, barter and non-monetary transactions play
a key role in transferring value from productive activities to the
loss-making sectors of the economy. We show how this transfer takes place,
and how it can be consistent with the incentives of economic agents. We
analyze a simple partial-equilibrium model of the virtual economy, and show
how it might prove an obstacle to industrial restructuring and hence
marketizing transition.
Keywords: Russia; quasi-market sytem; virtual economy; (follow links to similar papers)
49 pages, September 20, 2000
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