We analyze the process of restructuring in Russia. The Russian economy is bifurcating as some enterprises restructure and reduce the distance to the market, while other enterprises exploit relationship capital to survive without restructuring. Survival in this environment depends on initial...

This paper develops a two-period model of enterprise shutdown during post-Soviet transition, when firm performance is at best a highly noisy signal of its viability in the evolving market economy. The paper focuses at the industry level, taking a normative industrial-policy perspective, and...