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Transaction Costs in the Course of the System Transformation in Bulgaria

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  • Teodor Sedlarski

Abstract

This article is a study of key theoretical aspects of the transaction cost concept, being vital for the economic development, such as their impact on structuring and allocating the property rights – incorporated in the general issue of the changes in the institutions within the paradigm of the new institutionalism. Unlike the theory of Coase, the outcome of the privatization process shows that the initial allocation of the property rights is very important. The available transaction costs prevent from aligning the private costs and the social costs by means of case-by-case negotiations – the holders of some property rights are not aware of the consequences of their business activities. The reforms, required for liberalization of the market, pursuant to the standard neoclassical economy give inefficient results in Bulgaria. Therefore according to the theory of D. North the reason could be the incompatibility among the formal institutions, on the one part, and the informal rules and ideologies, on the other part, resulting in high levels of transaction costs.

Suggested Citation

  • Teodor Sedlarski, 2009. "Transaction Costs in the Course of the System Transformation in Bulgaria," Economic Thought journal, Bulgarian Academy of Sciences - Economic Research Institute, issue 2, pages 35-55.
    • Handle: RePEc:bas:econth:y:2009:i:2:p:35-55
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    References listed on IDEAS

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    Cited by:

    1. Nadezhda GESHEVA & Aleksandar VASILEV, 2017. "Revisiting the ‘invisible hand’ hypothesis: a comparative study between Bulgaria and Germany," Eastern Journal of European Studies, Centre for European Studies, Alexandru Ioan Cuza University, vol. 8, pages 45-77, June.

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    More about this item

    JEL classification:

    • O43 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Institutions and Growth
    • Z10 - Other Special Topics - - Cultural Economics - - - General

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