Abstract During the two centuries following the publication of Adam Smith’s Wealth of Nations the economists’ main objective has been to improve his analysis and in particular his basic statement that government regulation and economic planning are not
necessary for the functioning of an efficient economy, since the price system (the «invisible hand») can successfully coordinate the economy.However, the excessive attention to prices deviated research from other aspects of the economic system. Coase’s effort, through
his articles on «The nature of the firm» (1937) and «The problem of social cost» (1960), was to introduce in the traditional economic theory some institutional elements. The contribution of the first article was essentially the introduction into economic analysis of
transaction costs. In the second article it was shown that contracting in absence of transaction costs maximizes the wealth, quite apart from the assignment of property rights.The introduction of institutional elements can be very helpful for reforms in Eastern European countries, because
market economy can only work through appropriate institutions.
