The new institutional economics offers one of the most exciting new agendas in economics - the economic analysis of the evolution of institutions. Yet a careful ...of what is meant by evolution has been missing. This book fills this lacuna. It focuses on three of the approaches which are central to the new institutional economics: * the new theory of the firm, with particular emphasis on Oliver Willamson's transaction cost economics 2 evolutionary economics, taking the work of Nelson and Winter as the benchmark * game theoretic accounts of the spontaneous evolution of conventions and institutions inspired by Hayek The analysis shows that attempts to group these approaches under the same broad heading conceals many important differences. Not the least of these are the different meanings given to such key concepts as institution' and evolution'. Despite these differences, the book does identify two evolutionary mechanisms that govern processes of economic change in each of the approaches which is discussed. Drawing on recent work in biology and philosophy of science the author identifies some unresolved issues in attempts to transfer the concepts of evolutionary biology to economics. The book poses questions which no self-conscious economist working on evolutionary issues can afford to ignore