DP3022 Competition Enhancing Policies and Infrastructure: Evidence from Russia

Author(s): J David Brown, John S Earle
Publication Date: October 2001
Keyword(s): competition, infrastructure, market structure, Russia, transition
JEL(s): H54, L10, L50, P23, P31
Programme Areas: Transition Economics
Link to this Page: cepr.org/active/publications/discussion_papers/dp.php?dpno=3022

This Paper investigates whether the efficiency effect of product market dispersion is a function of the infrastructural and policy environment. We hypothesise that more developed transportation and communication infrastructure and lower government regulation may reduce transaction costs, intensifying the competition associated with a given market structure, and we use data from the recently liberalized and regionally diverse country of Russia to test the hypothesis. Estimating translog production functions on a large 1992-99 panel of manufacturing firms, we find that the efficiency impact of market dispersion varies positively with the regional density of highway, railroad and telephone infrastructure, but negatively with regional price regulation and the share of votes received by the Communist Party.