Keyword: «coase's theorem»

The timeliness of the study stems from the fact that the effectiveness of formal institutions determines the economic well-being of a country. The purpose of the article is to identify the role and functions of formal institutions in the context of Coase’s theorem. The study concluded that in the case of high transaction costs, formal institutions should play a key role in economic exchange, ensuring the transfer of property rights to the most effective agent. In the case of low transaction costs, formal institutions should provide the most favorable conditions for the voluntary exchange of property rights.