Universiteti xabarnomasi

part of society. If such a prototype is not found, a certain combination 
of proto-norms is formed under the influence of the expressed need, 
which can be conventionally called "crossing over". This leads to the 
formation of "new" proto-norms and their nominal and actual carriers, 
which become institutions or disappear from social practice as a result 
of the rooting process. Actors (individuals) are participants in the 
process of embeddedness and "arenas" of interaction are the venues of 
these processes. 
In our view, this concept differs from the previous concepts by the 
fact that G. Kleiner operates with such a concept as "event", which, in 
his view, is a kind of trigger of institutional dynamics. 
In turn, the concept of institutional architectonics put forward by 
Ukrainian scientists uses such categories as institutional evolution, 
institutional dynamics, and institutional pit to explain institutional 
changes. In the most general terms, institutional architectonics is the 
structure of institutions, formed from the interconnections of the way 
of thinking and action of people, rules, norms, stereotypes, traditions, 
institutions and other social formations in their correlation with the 
essence and general aesthetic plan of building a social system. The 
object of institutional architectonics is the structure of institutions, 
viewed and evaluated from the viewpoint of their correspondence with 
the essence characteristics of society and its general aesthetic plan. 
Advocates of institutional architectonics believe that if an institutional 
structure is built up based on basic institutions, gradually increasing and 
complicating its architectonics and modifying the framework itself, then 
we are dealing with institutional evolution. A classic example of 
institutional evolution is the institutional transformation of China, 
which, relying both on its millennial traditions and on Marxist ideology, 
gradually builds a new institutional structure, adequate to the 
requirements of the time. By rigidly holding on to the institutional core, 
the Chinese leadership has allowed sufficient dynamic changes that are 
within institutional elasticity to exclude breaks in the institutional 
structure. 
We agree with their view that institutional change should be 
pursued with appropriate rules to modify existing rules. The authors of 
this concept believe that market institutions are formed gradually in the 
process of market transformation, but this process will be more 
successful if they are based on the institutions of transformation, that 
is, on certain rules and norms of institutional change, which form the 
mechanism of transformation. In a transitional economy, this problem 
manifests itself, in particular, as a correlation between transformation 
of institutions and transformation institutions. The process of formation 
of rules, norms, procedures of institutional changes is a system of basic 
institutions of institutional dynamics. 
An institutional hole is formed in the institutional environment, 
where the need for institutional change is present at the same time and 
the mechanisms of such change are absent. 
The role of a disruptive force (factor) is played by the accumulated 
knowledge and experience that expand the worldview of the economic 
agent (entrepreneur). The new system of views of the entrepreneur also 
refers to the perceived relative costs of economic activity, the 
subsequent revision of which leads to violations in the system of relative 
prices and shifts in the comparative bargaining power of the parties, and 
changes in the latter, in turn, lead to a breach of institutional 
equilibrium. 
According to D. North's methodological approach, institutional 
equilibrium is a situation where, given the balance of power of the 
players (firms) and a given set of contractual relations that form 
economic exchange, none of the players thinks it beneficial to spend 
resources on changing agreements. A breach of this equilibrium implies 
an incentive to change the contractual terms and conditions. 
Renegotiation of contract terms in order to obtain some potential gain 
from the exchange is understood as incremental (continuous) 
institutional change. Since knowledge and experience are always 
improving, there is a constant dynamic process of institutional 
development in society. 
The process of decentralised choice of institutional forms of 
transaction (contractual rules) takes place on institutional markets. The 
concept of an institutional market was first introduced in 1994 by S. 
Pejovich, who wrote: "The market of institutions is a process which 
allows individuals to choose the rules of the game in their community. 
Through their voluntary interactions, individuals evaluate existing rules 
and determine and test the suitability of new rules. The most important 
function of this competitive market is to encourage institutional 
innovation and forms of adaptive behaviour". 
Changes in relative property rights create the preconditions for a 
revision of absolute property rights (institutional environment) in 
political markets. The political market is the place where explicit 
institutional transactions (transactions) take
place. This market 
encompasses a set of actors, organisations and procedures that shape 
and change the institutional environment. The subject of explicit 
institutional transactions are formal rules, coordinating the economic 
behavior of market actors. The outcome of transactions are institutional 
innovations, i.e. innovations implemented in formal rules without 
reference to future transactions for their implementation. In other 
words, these are various additions, changes made to existing 
regulations, adoption of new laws, regulations.
It should be noted that informal rules, due to their origin and 
scope of application, are rarely the subject of institutional transactions 
on political markets. The formalisation of an informal institution is a 
rare case. This process reflects the essence of the evolutionary variant 
of institutional development, when the norm underlying informal 
institutions acquires the force of law. 
The literature describes two directions of institutional change: 
spontaneous and purposeful. Spontaneous change emerges and 
spreads without anyone's prior intent or plan. An example of 
spontaneous change is the transformation in contractual arrangements 
during the non-payment crisis. These are institutional forms of deal-
making on the terms of advance payment for the value of goods 
supplied and barter exchange of goods and services. The first form was 
chosen by entrepreneurs to make the contract terms binding, while the 
other was chosen as one of the possible ways to stabilise prices. In the 
1990s, these institutional innovations played a prominent role in 
economic development and became major components of the 
institutional environment of the time. 
Purposeful (deliberate) change (or institutional design) emerges 
and spreads more or less according to some deliberate plan. The 
process of disintegration of central planning and the ensuing effort to 
create a new institutional structure with considerable assumptions can 
be described as an example of deliberate change. At the same time, this 
process is considered a prime example of discrete (revolutionary) 
changes, the essence of which is a radical change of formal rules. The 

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initiator of radical changes is the state and/or organised groups (the 
institutional entrepreneur). 
Based on the above, we believe that the role of entrepreneurs and 
the state as the driving force initiating institutional changes in the small 
business sphere is played by entrepreneurs and the state. The existing 
institutional structure does not always provide a balance of interests of 
all participants in the economic process. By fulfilling their main purpose 
of improving the efficiency of production, the institutions cause 
redistribution of income, economic opportunities and economic 
advantage in society. As a consequence, the current institutional 
environment of small business can be a "positive good" for some 
entrepreneurs and a "negative good" for others. Dissatisfaction with the 
level of income, narrowing of opportunities, deprivation of advantages, 
in a word, lost potential benefits force outsider entrepreneurs to form 
special groups which lobby their interests on the political market. In 
other words, they express a demand for certain institutions. This shows 
that there is an ongoing process of struggle in the economic system for 
the expansion of economic freedom through the construction of an 
adequate system of property rights. The described actions of 
entrepreneurs are characterised by purposefulness. However, in 
everyday life their activities are accompanied by a spontaneous process 
of formation of informal rules of conduct (business customs, 
entrepreneurial ethics). 
It is possible that an institutional framework that does not create 
incentives for entrepreneurial activity may lead to an economic crisis. In 
such cases, the institutional framework acts as the cause of inefficient 
functioning of the national economy, and the state initiates a 
restructuring of the institutional framework in order to change the focus 
of incentives. 
In the theory of institutional change, we are particularly interested 
in the concept of V. Tambovtsev, which explains the mechanism of 
institutional change through the microeconomic model of the 
institutional market under perfect competition [20]. Its author believes 
that the market of institutions (institutional market) has the elements 
of a classical market: demand, supply, price and competition. Although 
the market of institutions cannot be seen, it is assumed that its 
mechanism accompanies all the actions of an individual in the process 
of preparing a transaction. The role of a commodity in the institutional 
market is played by an institution, which belongs to the category of 
'durable goods'. Otherwise, they are called capital assets, capable of 
generating income over a long period of time.
Our previous theoretical studies have shown that the economic 
system generates demand for institutions necessary for entrepreneurs 
to facilitate the process of exchange and reduce transaction costs. V. 
Tambovtsev measures the amount of demand (QdI) for a particular rule 
by "the number of times economic agents turn to it when they engage 
in transactions relevant to that rule at some price of its use". He also 
believes that an individual's choice of one rule or another is conditioned 
not only by current economic benefits, but also by a wider range of 
circumstances, such as traditional religious or ideological constraints, 
etc.
А. Rounov, on the other hand, distinguishes between economic 
and organisational factors in the demand for institutions. Economic 
factors, he says, include changes in the relative prices of assets in 
different sectors of the economy due to the opening (or disappearance) 
of previous markets, decline in the product cycle; changes in the value 
of individual factors of production; new technological and innovative 
opportunities, which are difficult or unprofitable to implement within 
the existing system of rules. Organisational factors, on the other hand, 
include: changes in mental behaviour and ideology; changes in the 
mechanisms of the guarantors of the former system of property rights. 
In addition, he believes that, in general, the demand for institutions can 
be divided into two groups: the demand for the existing structure of 
property rights and the demand for new rules. 
The specificity of the supply of institutions is also due to the fact 
that institutional innovations are not patented in the market and there 
is no ownership of them, so the right to imitate them is free of charge. 
Moreover, in some situations developed countries are often prepared 
to pay for the cost of transplantation (the process of borrowing 
institutions developed in a different institutional environment), 
sometimes even competing for the right to grow their institutional 
product on new soil.
As for institutional transactions, their peculiarity lies in the fact 
that an institution is not sold or acquired in the literal sense as goods 
and/or services. The process of 'acquiring' institutions boils down to:
obtaining, in one way or another, information about the content 
of the rule, the algorithm for its implementation and the consequences 
of actions under the rule;
searching for a counterpart capable of and agreeing to interact 
with an individual according to the relevant rules;
making an explicit or implicit institutional transaction with him;
ensuring the guarantor's consent and willingness to impose 
sanctions in case of its violation. 
The ultimate acquisition of an institution turns it into a good. 
Depending on the interest group, three types of good are distinguished: 
public, club, private. Public action is able to provide institutional 
innovation as a public good. Small groups are effective in the production 
of club goods, and private goods are created and controlled by the 
entrepreneur himself. A. Shastitko believes that the information 
provided by institutions allows them to be considered a public good. 
According to G. Kleiner, it is not quite correct to talk about the 
demand for institutions. The concept of demand for a good as the 
aggregate willingness of agents to offer some values in exchange for the 
use of this good requires a certain level of specificity in characterizing 
both the good itself and the values exchanged. "If we are talking about 
some vague and indefinite good, such, say, as 'order', then the values 
exchanged for it also lose homogeneity and we cannot speak of their 
additivity". Accordingly, the concept of demand loses its correctness.
In addition, he notes that considering institutions as peculiar trust 
goods does not remove the problem because the formation of an 
institution is not the product of purposeful activity, but the result of 
unplanned evolution. In this sense, an institution can be the product of 
neither "institutional production" nor "institutional production" and, 
therefore, cannot be regarded as a commodity, a service or other 
market "good". 
And yet, in the model we are considering, price is considered an 
inherent element. In the case of institutions, the price of their 
acquisition (use) is expressed in the mechanism for making choices, 
comparing the benefits and costs of such choices. According to V. 
Tambovtsev, this "price" is quantified within the framework of a two-
point scale: 
cost-benefit ratio is acceptable; 
the cost-benefit ratio is unacceptable. 
If an institution is 'purchased' by economic agents, the sellers of 
the institutions do not make a pure profit. That is why V. Tambovtsev 
suggests that the above-mentioned costs to be borne by economic 
agents should be regarded as the income of sellers.
Equilibrium on a given market occurs if both parties agree to carry 
out a commodity transaction in a mutually beneficial institutional form 
with a satisfactory level of transaction costs. In reality, there are 
disequilibrium states in the market caused by a deficit (or surplus) of 
institutional forms (rules).