Problem of Residual Income as a Factor of Development of the Extralegal Sector in the Belarusian Economy

Abstract

Conclusions on the problems of managing state participation enterprises that have developed in the post-Soviet period in the Belarusian economy are substantiated on the basis of game theory. To find out the reasons for their formation, we used the category of “residual income” and models of managerial behavior, including a model of managerial benefit, a model of managerial prudence and agent model. As the basic conditions of the analysis we used two provisions. Firstly, the activities of the organizer of a business process, unlike other economic agents attracted by him or her, are associated with risk. He or she accepts responsibility for possible losses and compensates them at his or her own expense. Secondly, the key source of residual income is the synergistic effect that arises as a result of the actions of the organizer of the business process. The used model of relations between the state and state participation enterprise manager is based on a non-cooperative game that excludes the exchange of information between participants. The manager of state participation enterprise has two options: to appropriate the residual income informally or not to appropriate the residual income informally. The state may maintain a market level of managerial remuneration in the form of wages and other payments or not maintain the market level of managerial remuneration. Such a condition is introduced into the model based on the main provisions of the theory of justice. It is concluded that there are three equilibrium points. The first (Stackelberg equilibrium): the state maintains the market level of managerial remuneration, the manager appropriates the residual income informally, which will lead to the formation and growth of the illegal sector of the economy. The second and third equilibrium points coincide (Stackelberg equilibrium and Pareto equilibrium): the state maintains the market level of managerial remuneration, the manager does not appropriate residual income informally. There is no Nash equilibrium, however, introducing the state’s reputation into the relationship between the state and the manager allows us to dwell on the outcome, when the state maintains a market level of managerial remuneration, the manager does not appropriate residual income informally.