ABSTRACT

This chapter investigates exit and entry incentives affecting the quasi private cooperative firms of the Soviet perestroika era. During the era of perestroika, the Soviet government loosened its control over the economy and permitted the development of various forms of private enterprise. One of the consequences of this policy shift was the emergence and growth of a sector of producer cooperatives. A cooperative is an organization of individuals established for the purpose of engaging in some form of business activity. The Law on Cooperatives stated that producer cooperatives were financially independent of the state and provided formai guarantees of that financial independence. Article 21 of the Law addressed cooperative taxation and stated that taxes would be levied on the cooperative's income as well as on the personal incomes of its members and employees. During perestroika, nominal prices charged by cooperatives selling to the public tended to be higher than those charged by state enterprises and organizations.