Decentralization and the Precontract Dispute in Soviet Industry

Abstract

Precontract negotiations between enterprises play an important role in determining the detailed product mix and the timing of delivery in the Soviet planning system. This paper uses a comparative institutional framework drawn from the law and economics literature to analyze the legal regulation of these negotiations by Gosarbitrazh. In view of features of the Soviet economy which weaken the buyer's influence on the supplier, the key hypothesis is that Gosarbitrazh should favor the buyer in resolving precontract disputes, thereby forcing the supplier to satisfy the buyer's demand. This hypothesis is supported by the reported case law. Journal of Economic Literature, Classification Numbers: 052, 124.