Putin Seems to Be Finally Ready to Apply Economics 101 to Gazprom

I am no economist, but recall that it it is Economics 101 that governments need to minimize deadweight loss by natural monopolies. This article in the Tuesday issue of Kommersant says the federal government to cut expenditures by 10 percent every year in 2013-2015 indicates that Putin is getting serious in his efforts to reduce wasteful practices at Gazprom, Russian Railways. It comes on the heels of his earlier decision to freeze these companies' tariffs, as he realizes that the model of economic growth hinged on high oil prices has exhausted itself. (Here is a good explainer of factors behind his decision  .“Putin Paves Way for Gazprom Purge as Economy Weakens,” Evgenia Pismennaya, Bloomberg, November 24, 2013.)


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