ABSTRACT
This chapter provides an assessment of Hungarian competition policy during the transition process. The story of the export-dependent pricing system gives two important reasons why the transition had to bring about a completely new and much more active competition policy in Hungary. First, there was no reasonable alternative to the full liberalization of entry to the domestic market, because no solution could be found to force the discipline of competitive pricing behavior on domestic firms supplying the domestic market. Second, there were no viable substitutes to well-functioning markets and effective competition laws and policies. In the transition, however, the transformation of the legal, institutional, and ownership environment also confronts economic agents with major behavioral challenges. Natural monopolies are a very special testing ground for the efficiency of competition policy. The scale of Hungary's monopoly problem was quite considerable in 1989-1990, although some product markets had displayed quite a high degree of competition since the 1960s or 1970s.
