Rules, Regulations and Transaction Costs in Transition Bulgaria

subsections 1 and 4 of s. 9, which are just ten lines apart from each other, are mutually contradictory.
To be more precise, s. 9, subs 1 provides that within 14 days as from receipt of the proposal made by the
Commission on Drug Prices, the Minister of Public Health shall issue an order to register the ceiling price or
refuse registration while stating reasons. Out of the blue, however, subsection 4 provides that the failure of
the Minister to pronounce within the time limit set by the ordinance shall be deemed a tacit refusal. No doubt, the
reader would see here the same conundrum as me: how could a tacit refusal be tacitly reasoned?!?
We could also add the fact that according to s. 9, subs 2, the Minister of Public Health may by derogation
register a ceiling price higher than the lowest price registered in a Member State of the Council of Europe. In this
case, both the total inconsistency of the Ordinance, and the discretionary powers of the Executive come to the
fore. The Ordinance fails to list the cases in which a derogation is to be allowed. Hence, the administration is able
to make decisions on a completely discretionary basis and those decisions could be influenced in all sorts of
manners, bribery being one the best known.
This Ordinance is just one example of how imperfect and inconsistent regulations can impede the
process of enforcement, corrupt the environment and push up the transaction costs of the firms
operating in the country.
Further to a detailed review of the existing legislation which affects business environment in Bulgaria, the following
main groups of transaction costs were identified as stemming from the existing legal rules and the interaction with
the bodies of public administration:
1. Firm registration costs;
2. Costs to obtain a license, permit for or registration of the business to be carried on;
3. Operating costs relating to:
legislative amendments;
access to lending;
search for and supplies of needed raw materials, goods and services;
office maintenance and product marketing;
labour market and social security legislation;
audits / inspections and reporting;
payments to the Treasury;
4. Contractual costs (entering into and performance of contracts);
5. Transformation and exit costs.
III. Methodology
After the groups of transaction costs were identified, a questionnaire was compiled with a view to estimating
these costs. In order to provide a sound basis for comparison, some of the questions asked in the survey
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