http://www.economist.com/blogs/easternapproaches/2013/02/bulgarias-electricity-prices
This article describes certain aspects of life in Bulgaria, a nation that had operated a command economy while living under the Soviet Union. Since becoming its own independent country, Bulgaria has experimented with its newly adopted forms of capitalism, much like all other former Soviet states. The article outlines 'skyrocketing electricity and heating bills' as a particular problem that has provoked significant public outrage. Currently, the market for power is dominated by three foreign-owned companies. As a relatively poor country, high utility prices considerably affect the population. Some Bulgarians propose nationalizing the power companies, which would effectively be going back to more outdated economic ideas. Others have considered further liberalizing the market and decreasing the amount of power and leverage of the three-company oligopoly. Regardless of the outcome, this problem is surely indicative of similar struggles endured by other nations only recently transition from a command economy to market economy.
3 comments:
This article reminds me of the early United States. When entrepreneurs like Andrew Carnegie dominated industries and charged extremely high prices for their products and services. I believe Bulgaria's current situation only represents capitalism "growing pains" so to speak and these problems will solve themselves if Bulgaria sticks to their current system. If the price is too high then eventually other firms will enter the industry and the increased competition will decrease the price of this good.
It is important to note that even in the U.S., private power companies are highly regulated to keep prices low. Government regulation over monopolies/oligopolies in utilities is not an uncommon practice and I believe the Bulgarian government should step in to lower this cost.
A nice article. In my view, it is the responsibility of a recently transformed economies to ensure that the citizens are ready for the transition and are not facing unfairly high prices. Till the time that the economy grows and can sustain competition in all sectors, it is important that monopolistic or oligopolistic sectors be regulated. I agree with Andrew in this regard completely.
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