Industrial organization in a restructuring socialist economy: Evidence from Bulgaria

Abstract

Using new data for all state and cooperatively-owned Bulgarian establishments and enterprises in 1988 and 1989 we portray key aspects of Bulgarian industrial organization. During 1988–89: state ownership became less dominant; there was an abrupt reversal in the twenty year trend towards bigger economic units; more than half of the largest firms were concentrated in certain sectors, notably engineering and construction; using official prices, only about 10% of enterprises made losses. These data and other new data for manufacturing products enable calculation of diverse measures of market structure as this may evolve under the policies introduced in 1991. Indices of market concentration typically show substantial concentration; usually about 50% of manufacturing output was produced in potentially competitive environments. While estimates of minimum efficient scale imply that MES does not constitute a significant barrier to entry for new competitors, the underdeveloped nature of the Bulgarian capital market probably greatly restricted entry.