| With the development of economy and the deepening of social division of labor, the process of globalization and regional economic integration is advancing. In foreign countries, have appeared in most urban areas, urban agglomeration, metropolitan city coordinated development phenomenon, in the domestic, along with the deepening of reform and opening to the outside world, the barriers between urban and rural areas is gradually get rid of, the more developed areas of Pearl River Delta, Yangtze River Delta and the Beijing Tianjin Hebei metropolitan area also arises at the historic moment. And with mostly the continuous development of urban areas, between the inner region of the city gradually appeared the space of continuous phenomena, and in space for the city development laid the foundation and in fact formed the embryonic form of the city, laid the foundation for the development of the city. Jinzhong Taiyuan city based on the idea of building a large Taiyuan economic circle, in order to break through the bottleneck of the development of Taiyuan City, seeking to coordinate with the neighboring Jinzhong City, the system of innovation. Jinzhong Taiyuan city since the proposed has been experienced more than ten years, on the current point of view, whether it is the development of speed and the results of the development of the country with other cities there is a big gap. Therefore, this paper tries to from the perspective of new institutional economics to explore Taiyuan, Jinzhong City of the propulsion mechanism, and then gives the path selection, the city of theory to deepen and accelerate the pace of Taiyuan, Jinzhong City has important theoretical and practical significance.This paper argues that the important reason of Taiyuan city of Jinzhong is not slow in theory to recognize the city of advancing power, therefore, this article from the perspective of new institutional economics, the transaction cost theory, principal-agent theory and institutional change theory, defines the connotation of the city, the city that is two or two more than the city space adjacent, complementary industries, human homologous, in order to improve the regional competitiveness and interests to reduce transaction costs, and enterprises in promoting the government to actively cooperate and coordinate the organization’s participation, the formation of economic, social and cultural, ecological height harmonious city development process, then sort out Taiyuan Jinzhong City in advance of the problems, in-depth analysis of the current situation and problems of Taiyuan city of Jinzhong to promote the mechanism, and then to Countermeasures and suggestions, with a view to the further development of the city of Jinzhong, Taiyuan, and give some guidance to other cities in the country to the enlightenment.In this paper, the basic conclusion: first, the city is adjacent space, complementary industries, humane homology of two or more than two cities, to improve regional competitiveness and reduce the transaction costs of the interests, under the government’s positive cooperation to promote and enterprises and institutions and various coordination group woven in, the formation of economic, social, cultural, ecological highly coordinated unified process of urban development. Second, under the perspective of the new institutional economics, the mechanism of promoting the city is to reduce transaction costs, improve the incentive mechanism of local government officials to design and develop the secondary action group. Third, Jinzhong Taiyuan city to promote the results of the main focus on the construction of the infrastructure and build areas, the development of a serious lag, and Jinzhong City, Taiyuan City, the goal is greater. Fourth, Jinzhong Taiyuan city in the presence of radiation driven capacity is not strong, industrial isomorphism phenomenon is serious, lack of policy binding, the lack of effective mechanisms to promote and other outstanding issues. Fifth, Jinzhong City, Taiyuan City, the main problem lies in the mechanism of the failure to effectively reduce transaction costs, incentive mechanism design is not perfect and the lack of secondary action group. Finally, this paper gives the way to improve Jinzhong city of Taiyuan, which is based on the principle of reducing transaction costs, improving the incentive mechanism of local government officials, and cultivating the secondary action group.The innovation of this paper is that this paper defines the connotation of the city is the unity of action and the target, namely, that it is a dynamic process of evolution, and the transaction cost theory, principal agent theory and institutional change theory and analysis that the city of the propulsion mechanism, that is down to low transaction costs is the city of advancing the foundation, to improve the local government officials incentive mechanism design is the city of advancing the key cultivation secondary action group of the city to promote the protection. But as my research capacity is limited. In this paper, there are still on the transaction cost analysis of quantitative problems. In addition, about whether there is a relationship of mutual promotion between the three mechanisms to promote, this paper did not clarify the. This will also be needed to be further studied. |