Transactions costs, efficiency of allocation, Coase Theorem, AC/TC model, cost of regulation
It has been a long time since the transaction costs concept appeared in Economics. From the very beginning, transactions costs were perceived as a factor driving efficiency of allocation of scarce resources. Lower transaction costs environment may be achieved by redesigning an institutional framework. The question how to do it is however not simple to answer. It requires not only to recognize transactions costs properly, but also to measure them to use this category as a criterion for evaluating reforms and their total influence on the efficiency of economic processes. The aim of the paper is to present a theoretical model for presenting interaction of transaction costs and administrative costs of an institutional framework. This allows to recognize how the costs are related to the general efficiency of agents interacting within the framework composed of a market and of its legal framework.