Transaction costs and institutional change of trade litigations in Bulgaria

TL;DR

This paper applies new institutional economics to measure transaction costs in Bulgarian trade litigations, analyzing how judicial reforms impact these costs and overall market efficiency.

Contribution

It introduces a microeconomic model to accurately measure transaction costs and assesses the effects of judicial reforms on trade litigation efficiency in Bulgaria.

Findings

Transaction costs influence parties' behavior in trade litigations.

Judicial reforms have variable impacts on transaction costs.

Inefficient reforms may hinder market efficiency.

Abstract

The methods of new institutional economics for identifying the transaction costs of trade litigations in Bulgaria are used in the current paper. For the needs of the research, an indicative model, measuring this type of costs on microeconomic level, is applied in the study. The main purpose of the model is to forecast the rational behavior of trade litigation parties in accordance with the transaction costs in the process of enforcing the execution of the signed commercial contract. The application of the model is related to the more accurate measurement of the transaction costs on microeconomic level, which fact could lead to better prediction and management of these costs in order market efficiency and economic growth to be achieved. In addition, it is made an attempt to be analysed the efficiency of the institutional change of the commercial justice system and the impact of the reform of the judicial system over the economic turnover. The augmentation or lack of reduction of the transaction costs in trade litigations would mean inefficiency of the reform of the judicial system. JEL Codes: O43, P48, D23, K12