ABSTRACT
Geographical differences, weak connections and administrative barriers create conditions for price asymmetries that give opportunities for product arbitrage. Goods arbitrage as transactions of purchase and sale can be realised with money or in the form of barter operations. Barter was widely carried out during the initial accumulation of capital in Russia in the 1990s and was well incorporated into the shadow system of the Russian economy. The Russian economy gives opportunities for arbitrage of commodities, employing differences between prices which arise at different times, provided the cost of money for a particular company is lower than the difference between prices. Analysis of Gazprom activity shows that Gazprom bosses widely used product arbitrage. They restricted the access of independent gas producers to the Gazprom distribution network. Accordingly, the drop in the price of this gas allows further resale of the gas by Gazprom, and consequently the accumulation of profits in the accounts of arbitrage firms.
