Abstract: Contemporary Western theories in transaction costs uses "transaction" as the starting point of their research. This opens up a new perspective for research into the operation and evolution of the system, and improves the research system of micro-economics. Based on the concept of economy, the transaction costs theoryemploys research findings in economics, organization, and law to study transactions and economic system, andbroadens prospects and application areas of economics. Nonetheless, this theory somehow exaggerates the influence of transaction costs on the process and effects of production and transaction, and therefore exaggeratesthe role of transaction costs in innovation of the market and other economic institutions.