Rules, Regulations and Transaction Costs in Transition Bulgaria

Minimum 5
Maximum 300
Legal and consulting services
Arithmetical mean 73.2 120 82.94 23.83 150 65.58 74.42
Median 30 50 30 20 - 30 27.5
Valid cases 25 3 16 6 1 12 12
Minimum 2
Maximum 500
Other
Arithmetical mean 560 - 730 50 2000 150 45
Median 100 - 150 - - - 45
Valid cases 4 0 3 1 1 1 2
Minimum 40
Maximum 2000
The conclusion is that the present study would be of some help not by calculating the arithmetical
mean of entry costs in terms of time and money but by identifying the underlying reasons for these
costs. That could enhance any further efforts to minimise such costs in future.
The huge dispersion in the answers is particularly disturbing. It means that the entry transaction costs are different
for firms operating in the same sector and based in the same town. The difference of the start-up costs would
affect the prices over the first months after starting up. It will decrease the price competitiveness of those firms,
which have started later, and in return for higher costs as a result of the administrative discretion allowed by
Bulgarian legislation.
III.B. Operating costs
The following significant operating costs incurred by companies have been identified:
costs resulting from legislative amendments;
costs relative to the access to lending;
costs of searching for and finding the needed raw materials, goods and services;
costs of office maintenance and marketing the products, goods or services;
labour market and social security costs;
costs of debts to the Treasury;
costs relating to audits / inspections and reporting.
III.B.1 Costs resulting from legislative amendments
These could be most diverse, e.g. costs of labour, taxes, customs duties, licenses, etc. In the section on Business
Regulations and Transaction Costs we have already referred to the lack of preliminary impact assessment of
regulations in Bulgaria. This entails frequent legislative amendments, which, in turn, force firms incur numerous
extra expenses. The frequent amendments to business regulations make the environment highly volatile and often
tip the balance towards operating "in the shades".
Table 13 exhibits the year of adoption and the number of amendments to the basic legislative instruments
governing the business environment. The data is so articulate that they simply need no commentary.
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