Institutional economics, also known as institutionalism, school of economics that flourished in the United States during the 1920s and 1930s. It viewed the evolution of economic institutions as part of broader process of cultural development. The terms “institutional economics” or “American institutional economics” or “old institutional economics” as applying to the tradition of economist with Thorstein Veblen, John R. Commons, Wesley Mitchell. Later 20th century, the term “new institutional economics” has become well established as referring to the tradition of work stemming primarily from the transaction cost approach of Ronald Coase, Oliver Williamson, and Douglass North and etc.