Abstract: Basing on marginal analysis from classical economics, and appealing to the methodology of falsificationism through the detailed study of individual cases, Coase successfully refuted the doctrine of exteriority, which had been employed by Pigou to solve the problem of exteriority, and revealed the essence that institutional arrangement is the endogenous factor of economic growth. Through his approaches to institutional analysis, Coase founded Theory of New Institutional Economics, and impelled the shift of e...