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Regular version of the site

A Study of the Structural Problems of Economic Development in Russia

Priority areas of development: economics
Department: Laboratory of Industrial Market Studies
The project has been carried out as part of the HSE Program of Fundamental Studies.

This is a four-part study.

Part I.

Research Object: Mixed markets, in particular mixed oligopolistic markets of socially important services.

Research Purpose:
To identify the features of the functioning of mixed markets, to perform a comparative analysis of their regulation mechanisms.

Empirical Base of the Research:
Federal State Statistics Service data[1] and Moscow Department of Health websites[2]. In 2012, researchers modeled mixed markets of medical services and competition between public and private health companies, competition between private and municipal kindergartens (and the possibility of rent-seeking and corrupt behavior in these markets), and mechanisms and incentives for innovation in Russian industries.

Research Results:
1. A model of competition in Russian medical services market, where:
1.1. the quality of medical services depends on the form of ownership of the medical organization and on the proportion in which it is financed from mandatory health insurance funds and federal and regional budgets.
1.2. there exist possibilities for the state to influence the growth in quality of such services.
2. Researchers evaluated the potential efficiency of financial investments in medical services.
3. Possibilities were investigated concerning the rent-seeking and corrupt behavior of agents in the market for private and public kindergartens.
4. Researchers investigated incentives of private and public companies in the implementation of innovation in mixed industries and determined correlations between innovation and market structures.
5. Researchers observed and classified the innovation structure of Russian industry.

Implementation of the Research Results:
The results of this study can be used in courses on contract theory, the theory of industrial organization, microeconomics, and institutional economics.

International Partners
: Foreign fellow researcher - Professor Benjamin Bental[3].

Part II.

Research Object: An investigation of the factors that determine the level of competition in Russia's housing markets.

Research Purpose:  An analysis of the level of competition in Russia's housing construction markets.

This part of the study addressed the following tasks:

- The range of factors influencing the level of competition in Russia's housing construction markets was defined and justified.

- The methodology for estimating the competition level was implemented.

- Economic policy measures aimed at increasing competition in housing construction markets and the development of economy-class housing were determined.

Empirical Base of the Research:  Rosstat data, including Household Budgets Survey data, official websites of the federal executive authorities (Ministry of the Regional Development, FAS Russia), official websites of the local authorities, and official procurement website (torgi.gov.ru).

Research Results: According to research results, the following outputs were obtained:

1. Statistical proof was obtained on the hypothesis about the low elasticity of the housing supply in Russia's housing construction markets.

2. Justifications concerning the imperfect competition in these markets were proved by testing hypotheses on the impact of the share of individual housing construction in the total amount of housing construction, and institutional barriers to the amount of new housing supply by professional developers.

3. Statistical evidence was obtained showing that in regions with investment-attractive economies and growing housing markets, housing competition between developers is weaker than in regions with a slow growing or depressed economy.

4. It is concluded that the main goal of social and economic policy for housing development should be the promotion of the development of competition in the sector.

5. The necessity for significantly improving information to support decision-making in the development of real estate markets and the housing market, in particular, was justified.

From this part of the study, research results were published and presented as follows:

- The report “Modeling the Russian Housing Construction Markets” was presented at the Eurasian Business and Economic Society-2012 conference, Warsaw 2012.

- The article "Supply Elasticity of New Residential Construction in the Russian Regions" was submitted to The Journal of Housing Economics.

- An electronic preprint was prepared by the HSE's Centre for Fundamental Research, in English, according to materials contained in the article "Supply Elasticity of New Residential Construction in the Russian Regions".

- The article "The Housing Market in Russia: Current State and Prospects for Development" was prepared for the journal Problems of Economics.

Implementation of the Research Results: The research results could be used in justifying proposals to improve the government's housing policy and anti-trust policy, and to prepare training materials for higher professional education training courses in the fields of state and municipal government, and the housing economy.

Part III.

An analysis of possible approaches to a reform of export duties on oil and oil products.

Research Object:  Russian oil markets.

Research Purposes: To illustrate the current situation in the Russian Federation's refining industry, to justify the need for fiscal and institutional reforms in the sector, to design different versions of these reforms and to estimate their consequences.

Empirical Base of the Research: Data belonging to the Petromarket Research Group and the International Energy Agency; articles and research on the development of Russia's oil refining industry; and tax, anti-trust, and other laws of the Russian Federation that affect various aspects of the studied problem.

This research contains an analysis of the current state of the Russia's oil refining industry.

It’s demonstrated that despite the fact that the technological level of Russia's petroleum refining sector is low as compared with the technological level of the world's largest petroleum refining industries, the Russian industry has remained more profitable than, for instance, Europe's has for the past few years. This has been associated with the presence of a specific system of export duties on oil and petroleum products that was introduced in Russia in 2004.

Despite the profitability of Russian petroleum refining, investment activity in that sector has been extremely low. The reasons for this are defined during the study. In addition, an analysis is made of the possible directions reforms could take to stimulate the development of the Russian petroleum refining industry. One of these reforms should involve the system of export duties on oil and petroleum products, three versions of which are analysed in the study.

Implementation of the Research Results: The research results could be used in the development of fiscal and institutional reforms in Russia's oil industry.

Part IV.

Research Object: Regulating the telecommunications market in Russia.

Research Purposes: To analyse the impact of government regulation on the level of development of the telecommunications market in Russia as compared with other countries.

This research compares the quality of telecommunications market regulations in Russia with best practices of the regulation of Europe's electronic communications sector. On the basis of this study, the score for the effectiveness of the regulation of Russia's telecommunications is calculated using ECTA Scorecard methodology. This makes it possible to conduct a comparative quantitative analysis of regulation in Europe and Russia and to analyse the influence of regulation on market development. We find that the market for broadband access to the Internet is sensitive to the quality of regulation within the telecommunications sector.


[1] http://www.gks.ru/wps/wcm/connect/rosstat/rosstatsite/main/

[2] http://mosgorzdrav.ru/mgz/komzdravsite.nsf/va_WebPages/about?OpenDocument