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Empty Moscow Stores: A Cautionary Tale For Property Innovators, Michael A. Heller

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Under socialism, governments stifled markets and often left store shelves bare. One promise of transition was that new entrepreneurs would acquire the stores, create businesses, and fill the shelves. 2 However, after several years of reform, storefronts often remained empty, while flimsy metal kiosks, stocked full of goods, mushroomed on Moscow streets (Rapaczynski 1996). Why did new merchants not come in from the cold? This chapter argues that even if the initial endowment of property rights were clearly defined, corruption held in check, and the rule of law respected (e.g., Gray, Hanson, and Heller 1992; Frydman and Rapaczynski 1994; Shleifer …