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European Review of Agricultural Economics 2009 36(2):231-252; doi:10.1093/erae/jbp022
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© Oxford University Press and Foundation for the European Review of Agricultural Economics 2009; all rights reserved. For permissions, please email journals.permissions@oxfordjournals.org

Critical masses in the decollectivisation of post-Soviet agriculture

Martin Petricka and Michael R. Carterb,c

a Leibniz Institute of Agricultural Development in Central and Eastern Europe (IAMO), Halle (Saale), Germany
b Department of Agricultural and Resource Economics, University of California-Davis, USA
c Department of Agricultural and Applied Economics, University of Wisconsin-Madison, USA

Corresponding author: Martin Petrick, Theodor-Lieser-Straße 2, 06120 Halle (Saale), Germany. E-mail: petrick{at}iamo.de

Received August 2008; Revision received May 2009. Decollectivisation in post-Soviet agriculture has generally been slow except for islands of complete individualisation. Our model interlinks two types of critical mass phenomena that can explain these outcomes. First, positive network externalities reshape decollectivisation incentives after a sufficient number of reform pioneers shift to private farming. Second, workers have preferences for behaving in conformity with their social reference group. This allows collective farm managers interested in cementing their own power to manipulate reference groups by limiting workers' horizons. We provide empirical support with a threshold regression based on a unique data set of regional reform outcomes in Moldova.

Keywords: agricultural transition, former Soviet Union, social interaction effects, network externality, Moldova

JEL classification: D23, O18, P32, Q15


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