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Generally, Communism believed in economic central planning, with each field being serviced by one "company" (to avoid waste).
Why was it that the Soviet Union had multiple airplane manufacturers, many of which had openly competing airplanes (MiG and Su, for example, both made fighters).
Why didn't they "merge" them into one large bureau?
I can't speak to the specifics of the Soviet Union, but I want to address the opening assumption of the question.
Generally, Communism believed in economic central planning, with each field being serviced by one "company" (to avoid waste).
This is untrue of (or at least unnecessary for) both communism and centrally planned economies. A centrally planned economy is one where production, prices, and distribution are set by the government, not by market forces. No monopoly is necessary. Communism does not require a centrally planned economy, but rather is about the ownership of the means of production which covers a wide spectrum of social, political, and economic structures.
What you're asking about is the Soviet model. It's important to not use the Soviet model as a stand in for communism. Communism is a very broad set of social, political, and economic philosophies. The Soviet model is a specific, and rather broken, flavor featuring a centrally planned economy, single party control, and powerful committees. The Soviet model is more like an oligarchy masquerading as communism.
Two examples of centrally planned economies within the United States are large scale manufacturing for the military and, until very recently, space. The US government is the major buyer of things like aircraft carriers, tanks, nuclear submarines, and heavy launch vehicles. They effectively control what is produced, who it gets distributed to and, somewhat, the price.
The US government deliberately doles out contracts to multiple suppliers, even to the point of paying more money, in order to keep multiple suppliers around (also to get the votes of powerful senators by funneling money to their districts). This is to foster competition, prevent a single company from controlling the market, and also as a hedge in case one goes out of business.
For example, there were two builders of US Navy submarines, Newport News Shipbuilding and General Dyanamics Electric Boat, but reductions in the US navy's submarine fleet means now there is only one, Electric Boat. Should something happen to General Dynamics this would be put the US's ability to build submarines, a highly specialized skill, in danger.
Company vs Design Bureau
It's important to distinguish between a company and a design bureau. Organisations such as MiG (Mikoyan-and-Gurevich Design Bureau), Yakolev (JSC A.S. Yakovlev Design Bureau), Tupolev (OKB-156 or Tupolev Design Bureau) and Sukhoi (OKB-51 / Sukhoi Design Bureau) where, as the names suggest, "design bureaus." They designed aircraft, but did not manufacturer them.
Outsourced Manufacturing
Manufacturing was handled by separate state-owned factories, often more than one, and was quite disconnected from the design process.
So MiG might design an aircraft in response to a design request or competition from the air force (i.e. the soviet government), and then a number of factories around the USSR would be spooled up to manufacture the parts and assemble them into working aircraft.
Internal Competition
The different design bureaus, as @sds commented, competed each other to win design competitions set forth by the government as a form of internal competition. Just like a modern company might have subsidiaries or departments compete internally for work, because it drives efficiency and/or innovation.
Specialisation
In addition, the bureaus tended to have their own specialities (fighters or bombers or civil aircraft, etc.), and were often personality driven by the name/s behind them. E.g. Mikoyan was a well respected engineer within the USSR and he headed MiG. He was also Sukhoi's mentor, and the latter eventually left MiG and founded his own design bureau.
Post-USSR
In Russia's modernised economy, some of the design bureaus successfully transitioned into corporations. For example, Sukhoi is now a privately-owned company (fully owned by United Aircraft Corporation) which designs and manufactures military and civil aviation aircraft.
In short: politics: neither managed to eat each other.
The longer version:
First of all, "socialist competition" was an "official" answer to the issue of ineffectiveness of duplication of efforts.
Second, during the WW2 there were many more fighter design bureaus, but most of them were re-purposed after the war: Lavochkin - to spacecraft, Yakovlev - to passenger aircraft.
Third, in the area of bombers the situation was a little bit more uneven: while Tupolev killed Myasishchev, it failed to absorb Ilyushin.
The point is that neither Mikoyan nor Sukhoi could eat each in the "under the carpet" fights, so they were independent until 10 years ago.
MiG, Sukhoi, Tupolev, Yakovlev, Ilyushin, Mil, Kamov, Beriev, Antonov were design bureaus, not manufacturers. It was totally common if a certain factory would produce planes of Tupolev and Ilyushin designs at the same time.
Why several design bureaus? Possibly because of different personalities and methods of the chief designers. A person who had sufficient achievements would be given a team to guide. And the team's volume was limited by the leader's physical capabilities.
It is also to note that while the purpose of the planes could be interchangeable, there were differences in approach. For instance, Antonov produced civil airliners, like Tupolev and Ilyushin. But they specialized on planes with the wing on the top of fuselage while Tupolev and Ilyushin designed planes with the wing on the bottom. Tupolev designed narrow-body aircrafts, while Ilyushin designed both narrow and wide-bodied.
All of the design bureaus and plants were the subsidiaries of the respective Ministry of Aviation Industry.
Economy was indeed centralized but not absolutely. This applies not only to airplanes but to cars and to many other items. There were usually more than one manufacturer.
Speaking of the airplanes one has to distinguish the plants and design bureaus. There were really many airplane designers, and there was a severe competition between them. The state commission usually selected a model from several models made by different designers. The winning model went in production on one of the state owned plants. The fight between various design bureaus was very far from "honest competition". But I suppose that this situation satisfied the authorities: probably they understood that competition is good. Same situation prevailed in the missile industry and in some other war-related sectors of economy.
Airplane design was a very prestigious occupation, and some design bureaus directors were relatives of Politbureau members (like Mikoyan and Kaganovich) or other people closely affiliated to the power structure (Yakovlev).
I'll leave the airplane manufacturers and Soviet Union but I think It will be stil valid. So let's move a bit western and southern from moscow to Czechslovak Socialistic Republic. It was part of Comecon and obeyed the orders from the Kremlin.
There were many factories competing each other but under the rule of "One Party" the car-makers' fields were distinguished:
The companies did not compete agains each other; they were forced to share a lot of parts instead. The Tatra 613, last Tatra car, used same handles, switches as skoda 130 and Skoda Favorit. Praga V3S (sometimes called half-Tatra) used in-line 4 cylinder engine based on Tatra V8 engine and cab based on Tatra 805 truck. Liaz firetrucks used cabines based on Karosa B732 bus.
The reason for it is that "manufacturing airplanes" is misleading in terms of suggesting that it's like uniform activity regardless of plane category. It's not, manufacturing a bomber might very well require a different experience, skillset and tooling than manufacturing a fighter.
This is counter-intuitive, but joint programs can often induce greater costs per unit and type than separate programs taken together. For instance, Joint Strike Fighter would likely be significantly cheaper if ordered as three separate airplanes:
Source: "Do Joint Fighter Programs Save Money?" by RAND Corp (http://www.rand.org/content/dam/rand/pubs/monographs/MG1200/MG1225/RAND_MG1225.pdf)
Suppose you have One Big Soviet Airplane Factory that produces all the airplanes. According to findings cited above, it would make sense for it to have several separate divisions (definitely two for fighters and bombers, maybe a third one for tactical bombers, and what about marine aviation? how about piston-engine-powered basic training aircraft, does it make sense to manufacture them in the same division/facility as jet fighters? what about utility helicopters? what about anti-submarine warfare helicopters? how about wing-in-ground-effect ASW ekranoplan like Beriev VVA-14? http://uk.businessinsider.com/soviet-unions-bartini-beriev-vva-14-plane-2015-1). They likely would have to have their own specialized facilities.
What if those divisions were separate enterprises? The cost savings by lumping them all into one would not be great (save some on a few managers more + more than 1 HR, that's it), while likely a lot of value would be lost: different mindsets, better specialization, unique experience, different bosses and managers trying out different approaches to do stuff.
The Soviet theory to do this, that is, to separate design bureaus from fabrication facilities was actually optimum way to do it: have the best design first, then have it manufactured by the facility best suited for peculiarities of the job.
Economically speaking, it makes sense to merge only enterprises and facilities fulfilling both of the following conditions:
It did not make sense for the Soviets to go beyond that.
Let's put it simply, detailed answers have already been posted. Mikoyan-Gurevich (MiG), Sukhoi (Su), Tupolev (Tu), Yakolev (Yak), Petlyakov (Pe), Lavochkin-Gorbunov-Gudkov (LaGG) and Ilyshin (Il), the most notable ones, were all design bureaus or teams. All manufacturing was done by state factories (same applies to small arms, AFVs, etc.). So, once the design was complete, the design bureaus had nothing to do with the manufacture. They had no stake in it and, indeed, zero control over it. They merely provided the plans and development. We can think of it as the state being the company, which controls the factories, and the design bureaus being departments inside the company providing the plans.
There is no difference between central planning and capitalism. You can see an overview here:
http://www.sjsu.edu/faculty/watkins/stalinmodel.htm
Each firm in the Soviet economy resembled a capitalist firm, had to sell products, and bought intermediate goods and labor on the market. Although there were technically "quotas", they made no practical difference to the firm's behavior in the vast majority of cases. There was also public housing, education, and similar government activities performed in capitalist countries.
From this you can see that the answer to "why did the Soviet economy do X?" type questions can be answered by "the same reason everyone else did that".
hmm,
The country here is not really important. This happens in USA and other countries that want to support aircraft builders.
From what I remember from MIG / Sukhov / Illushin documentaries, they always competed between each other.
BUT, MIG and SU from 60s until now started to make DIFFERENT types of fighters made for different purposes.
Example could be:
Su-27 - MIG-29 Su-35 - MIG-35
Both are fighters, but SU-35 is a heavy fighter and MIG is light fighter. Both have their own separate purposes.
USSR and Russia support their manufacturers so that those important industries dont die and start selling bicycles like it was in 90s.
Russia right now is 2 in arms sales(27% of world sales) - building high technology products nets a big buck.
It was common to produce multiple 'competitive' weapon systems, especially at prototype stage, which motivated teams and ensured that failure / delay of one project wouldn't leave them without a solution in that area (as sometimes happened in the West => e.g. the British Nimrod AEW or the US Osprey).
http://www.globalsecurity.org/military//world/russia/industry-development.htm
Ryszard Kapuscinski in "Imperium", makes the point that often the centrally-planned COMECON economies like the USSR had more competing companies, not fewer, as they company with the inferior products would not go bankrupt.
The example he gave was televisions, at the time, a high-tech, prestige product. Directors of large industrial concerns would want to build them, even if it was not in the plan, and so would divert resources to make them. Therefore, there were very many substandard televisions on sale, built solely as vanity projects.
In the case of aircraft, it would be hard to divert the required quantity of resources to their production, but the simple fact that it is more efficient to rationalise production is not a necessary reason for doing it, except in a market economy.
It's also worth pointing out that the centrally-planned economies were not always exact copies of each other, all permitted various forms of market mechanisms, and that people did not always do what was in the plan. As others have pointed out, even in "market economies", government bodies often enforce rationalisation in industry.
