Transaction Costs in the Course of the System Transformation in Bulgaria

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.