Introducing the transaction cost economics (TCE), the article, as its main concerns, tries to explain the method of making the concept of transaction cost operational and applying it in empirical studies. In this paper, the writer tries to provide some answers to these questions: How do followers of institutionalism and transaction cost economists use this concept in practice and empirical studies? And basically, do they have any coherent method to deal with subject matters of economics or that institutional approach is only story telling?New institutional economics (NIB)are divided into two main areas; institutional environment and institutional arrangement. TCE is related to the institutional arrangement and Williamson has related it into governance structure. Coase's article entitled "The Nature of the Firm" is the beginning of this approach which emphasizes the firm must be considered as a governance structure, rather than a production function or a technological construction. TCE tends to make the concept of transaction cost operational and for achieving this purpose, uses the idea of firm as a governance structure and develop "discriminating alignment" hypothesis.

I am going to assess shortcomings of Transaction Cost Economics (TCE) of Oliver Williamson My argument is that this analysis suffers from misidentification of the relevant problem of the theory, analytical incoherence, inconsistent empirical support and methodological defects. In formulating Coase's fundamental idea, Williamson accepts an efficient equilibrium which occurs once forever, thus he can not identify the main 'problem of organization theory and he can not explain the evolution of organization and society as a whole. His analytical problem originates from rationality presumption. He accepts rationality IS bounded and as a consequence all contracts are incomplete. But he argues that rationality is not so bounded that agents are not able to choose the best and less costly incomplete contracts via their farsightedness. Despite the well-known claim that TCE are supported by vast empirical studies, deep reviews of literature show that empirical evidence does not corroborate TCE hypothesis who wholeheartedly. Even if this claim is true and TCE hypothesis and predictions are confirmed by empirical data, (1) this does not mean transaction costs are minimized and (2) deriving policy implication for improving organization and society is impossible yet. From methodological point of view, this approach assumes Systems are close, and establish fix relations among variables. From this instrumental point of view reality is constrained to empirical and observable areas, and because of this view understanding observed reality and casual power of unobservable reality is impossible.

The optimal selection of portfolio is one the most important decisions in managing investment funds. Several approaches have been proposed to determine what is the best trading strategy. Most of these common approaches are based on single period optimization, however, as investment is a long-term concept, such short term profit maximization cannot fully exploit the opportunities that an investor might get if he/she looks into a longer term. To this end, in this paper, we intend to extend the single-period optimization into a multi-period optimization and also, to make it more realistic, we will incorporate transaction cost in our model. To investigate the validity of the proposed scheme, we have analyzed several examples using which we have presented the steps of our approach and also statistically compared the performance of the single and multi- period optimization using Mann-Whitney U test. Based on the results of this paper, we can conclude that multi-period and single-period optimization might have similar performance if we look at short time span of the system. However the superiority of multi-period optimization becomes more evident as we extend the time span of the system which gives multi-period scheme more freedom to suggest better portfolio selections.

The optimal selection of portfolio is one the most important decisions in managing investment funds. Several approaches have been proposed to determine what is the best trading strategy. Most of these common approaches are based on single period optimization, however, as investment is a long-term concept, such short term profit maximization cannot fully exploit the opportunities that an investor might get if he/she looks into a longer term. To this end, in this paper, we intend to extend the single-period optimization into a multi-period optimization and also, to make it more realistic, we will incorporate transaction cost in our model. To investigate the validity of the proposed scheme, we have analyzed several examples using which we have presented the steps of our approach and also statistically compared the performance of the single and multi- period optimization using Mann-Whitney U test. Based on the results of this paper, we can conclude that multi-period and singleperiod optimization might have similar performance if we look at short time span of the system. However the superiority of multi-period optimization becomes more evident as we extend the time span of the system which gives multi-period scheme more freedom to suggest better portfolio selections.

Transaction Cost Economics (TCE), as a subset of New Institutional Economics (NIE), is the combination of Economics, Organization and Law. Noble Prize in 2009 was dedicated to Oliver Williamson who was the most popular face in the Economics as TCE main Contributor. In TCE, the main issues on the one hand  is how institutions follow Characteristics of Transactions, On the other hand, the making or buying decision or Vertical Integration is one of the focal question in TCE. For Operationalization of this question, TCE use The Discriminating Alignment Hypothesis. Base on this Hypothesis, governance structure aligns with characteristics of transaction subject to transactions costs minimization. In these perspectives, TCE reveals the proper answer to need of managers for make or buy decisions. So cognition of Station and foundations of TCE, with the consideration of its wide applications as interdisciplinary science in recent years, is the purposes of this article.