Institutional economics

Institutional economics is the study of how economic outcomes are shaped by the formal and informal rules that govern human interaction — not merely markets, but the institutions that make markets possible: property rights, contract enforcement, regulatory frameworks, and social norms. It rejects the neoclassical assumption that economic behavior can be understood as the optimization of rational agents in a featureless institutional void, treating instead the institutional environment as the primary determinant of what is produced, who gets it, and how efficiently resources are allocated.

The field emerged from the work of Thorstein Veblen, John Commons, and Ronald Coase, and was revitalized in the 1970s–90s by Douglass North, Oliver Williamson, and Elinor Ostrom. North argued that institutions are the rules