FOOD-PRICES AND MARKET INTEGRATION IN RUSSIA - 1992-93

in January 1992, Russian retail food prices were largely freed from national regulation. Food subsidies were reduced. Retail prices immediately rose sharply, and kept rising with inflation throughout 1992 and 1993. In this paper we examine the extent to which this reform constituted genuine price liberalization, i.e., food prices that respond to supply and demand conditions. Two reasons for skepticism are, first, food marketing enterprises were not privatized or significantly restructured, and second, regulation and subsidization of food continued in sub-national jurisdictions. Nonetheless, it is possible that local monopolies and policy makers permitted market forces to operate sufficiently to achieve improvements in market and pricing efficiency. We test for such improvements by means of econometric investigation of geographical price differences.