new institutional economics literature review

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• Journal of Economic Literature
• September 2000

The New Institutional Economics: Taking Stock, Looking Ahead

• Oliver E. Williamson
• Article Information

JEL Classification

• B52 Current Heterodox Approaches: Institutional; Evolutionary

The study aims to briefly review the main directions and latest trends of new institutional economic theory (NIE) that puts institutions in the focus of its research as an alternative to neoclassical economics. We present the applied definitions of institutions, highlight the main steps in the evolution of the institutional perspective and review its three main directions (property rights, transaction costs and contracts). Institutional economic works from the empirical field that prove significant connections between institutional variables and economic performance are also presented. We highlight new directions elaborated in the latest research. As a conclusion we summarize the main characteristics of NIE in order to call attention to the usefulness and value of this economic theory.

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New Institutional Economics

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• P. K. Rao 2  

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An economic analysis of real-world situations often warrants an analysis of the governance of institutions (or lack of the same) and their interactions which may lead to ‘rational’ decision-making models and applications of neoclassical economics (NE).

• Transaction Cost
• Institutional Economic
• State Practice
• Shadow Economy
• Informal Economy

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Rao, P.K. (2003). New Institutional Economics. In: The Economics of Transaction Costs. Palgrave Macmillan, London. https://doi.org/10.1057/9780230597686_5

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