Abstract:Transaction costs,as a basic concept,are the cornerstone of the new institutional economics . Along with the rise of the new institutional politics and the new institutional sociology,this concept,originally an economic term,has its limitations in the research in these two fields .Now many people are payingclose attention toinstitutional costs .Institutional costs,being an objective social fact,mean all the resources devoted to each sector of an institution . In an entireinstitutioncycle,certaincost should be paidineach period,soinstitutional costs contain making cost,execution cost,supervision cost and transition cost,all of which are interlinked . Institutional costs are decided by several factors,which means that it is affected not only by political,economic and social environment,but also by the competition among different interest bodies and informal institutions .