Applying the maximum principle of optimal control that is widely used in the theories of endogenous growth to the decentralized market, this project will study how, under the consideration of transaction costs, producers and consumers choose the optimal degree of production roundaboutness and determine the growth rate of the economy. The purposes of the project can be viewed from two respects: 1. From the view point of growth theory, the project studies how the combined effect of production widening, i.e. learning by doing effect caused by social production capacity, and production deepening, i.e. economies of division of labor caused by higher degree of production roundaboutness, improve the productivity of production and thus create the possibility of permanent growth. 2. The project also emphasizes the important role of transaction costs, as the new institutionalism having highlighted, in the determination of optimal production roundaboutness, in contrast to that tradition concentrating how the organization from for transaction is chosen. We shall start with an one-sector model in which the knowledge of production is available freely, and show that the optimal degree of production roundaboutness depends on the rate of transaction cost. Next, in an extended two-sector model in which the technology of roundabout production can be invented only through investing scarce resource, we shall demonstrate how the path of transitional dynamics leads the economy to its steady state that reveals permanent growth.