The New Palgrave Dictionary of Economics

2018 Edition
| Editors: Macmillan Publishers Ltd

Virtual Economy

  • Clifford G. Gaddy
Reference work entry


The virtual economy was the system of informal rent distribution that arose in postSoviet Russia in the 1990s as nonviable Soviet-era manufacturing industries sought to protect themselves from the discipline of the market. Enterprise directors and their allies throughout the economy (including government officials) colluded to use nonmarket prices and various forms of nonmonetary exchange such as barter to transfer value from resource sectors to manufacturing industry. The article discusses the system’s historical roots, describes some of its characteristic phenomena, and outlines a model for behaviour of enterprises.


Arrears Barter Barter in transition Command economy Corruption Non-market prices Non-monetary exchange Relational capital Rent sharing Soviet Union, economics in Tax offsets Virtual economy 

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© Macmillan Publishers Ltd. 2018

Authors and Affiliations

  • Clifford G. Gaddy
    • 1
  1. 1.