Abstract: Patent technology transactions are imbued withhigher costs because of the particularities of patent technology and the softening of institutional incentives and constraints. The transaction cost theory of new institutional economics is an important tool to analysepatent technologytransaction costs.The control of patent technology transaction costs depends on complementation, collaboration, and strengtheningby government institutional arrangementsand enterprise institutional arrangements.

Key words: patent technology, transaction cost, institution innovation, institution design