The transition from a centrally planned economy to a free market or a Essay - 1

The transition from a centrally planned economy to a free market or a mixed economy (Russia and China) - Essay Example However, where there is existence of monopolist in a capitalistic market there would be a single producer who would not meet the market demand and would charge an exorbitant price to the buyers. This happen because the monopolist would be the sole owner of the means of production in that market (Samuelson and ‎ Nordhaus 29-47). Therefore in circumstances of monopolisation there is an ardent need for the intervention of the government of the country and to put a price ceiling so that the monopolist’s power is under check. On the other hand in case of a centrally planned economy there is a monopolisation of the power of the government. Hence the prices and the allocation of the resources are determined entirely by the government of the country. Thus the decision regarding the price and quantity controls would be taken by the government of the country.A part of the Soviet Union the economy of Russia was a centrally planned economy. The enterprises in the country were comple tely under the control of the government. This set up was existent in the country from 1982 to 1991. Due to the command framework in the country there was stagnation in the growth and development in the economy. Therefore after the collapse of the Soviet Union in 1991, there was a need felt for the transition of the economy to an economy which is market based (Snooks 12-19). There were several aspects of this transition.