Institutional trap of the defense-industrial sector

Poshelyuzhnyy S.V.1
1 Волгоградский государственный университет

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Journal paper

Russian Journal of Entrepreneurship *
Volume 18, Number 10 (May 2017)
* Этот журнал не выпускается в Первом экономическом издательстве

Citation:

Poshelyuzhnyy, S. V. (2017). Institutional trap of the defense-industrial sector. Russian Journal of Entrepreneurship, 18(10), 1557-1566. https://doi.org/10.18334/rp.18.10.37932

Abstract:
The article studies economic and legal aspects of regulation of the Russian domestic weapon-production market and the problems of efficiency that it engenders. We recognize the methodology of pricing and the relationships that are developed on its basis between the customer and the military equipment manufacturers as the key feature of the institutional environment formation. Both sides indicate that the current interaction needs to be reformed. The main options for reforming the industry include: revision of formula for pricing, transformation of the industry on the basis of the increase in the number of economic entities and the creation of a centralized settlement center. The most effective strategy is the strategy of reforming the defense industrial complex, the first step of which is to change the formula for pricing by the Ministry of Defense, because it is the main factor that stimulates the industry to seek opportunities to increase costs.

Keywords: efficiency, institutional trap, defense industrial sector, transaction costs, identity, pricing of the State Defense Order

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