This thoroughly revised, extended and updated edition of a critically acclaimed textbook provides an accessible and cohesive introduction to the burgeoning discipline of institutional economics. Requiring only a basic understanding of economics, this lucid and well-written text will be essential reading for undergraduate and postgraduate students wanting to understand the problems of the real world - such as entrepreneurship, innovation, the cost of the welfare state, international financial crises, and economic development. As institutional economics is now revolutionising policy making, the book can also serve as a guide to the pressing problems facing policy makers in mature and emergent countries alike.

Key features include: A short 'Primer' at the beginning of each chapter to highlight the main issues and their relevance. Key Concepts such as 'institutions', 'economic order', 'coordination costs', 'competition' and 'public policy' are highlighted and clearly defined. International coverage is ensured as the three authors, experienced academic teachers, work in the US, Europe and the Asia Pacific.