The institutional problems of agglomeration development in modern Ukraine are investigated. The main institutional traps that increase transaction costs in the agglomeration process and limit the development potential of agglomerations are outlined. In particular, it concerns institutional traps: structural disproportions, negative expectations, vain hopes, grant dependence, divergence, incompatibility of motives, and illegalization. The basic mechanisms and effects that facilitate the formation, spread, and fixation of institutional traps are described, both in the evolutionary context and from the point of view of modern socio-economic conditions in Ukraine. The essence of the effects of coordination, assimilation, combination, cultural inertia, and lobbying in the agglomeration process is revealed. Examples of their negative impact on agglomeration processes in Ukraine are given using the example of the emergence and expansion of some institutional traps. It has been proven that gaps in the regulatory and legal system of agglomeration development in modern Ukraine are very important factors in forming an institutional trap. The significant role of the institutional and legal environment in overcoming institutional traps is indicated, and the need for its improvement is noted. At the same time, it is shown that today, the importance of factors such as the efficiency of agglomerations’ public governance and the quality of human and social capital of the territorial communities that are part of them is growing. In particular, attention is focused on the expediency of intensifying intermunicipal cooperation and intersectoral partnership. Special attention is paid to business, scientific, and educational institutions, civil society institutions, and others in overcoming institutional traps. At the same time, priority areas of their positive impact on increasing the efficiency of the Ukrainian agglomeration functioning are outlined. Priority tasks for eradicating existing institutional traps and preventing their further emergence at the stage of post-war recovery of the Ukrainian economy are substantiated. The focus is on Ukraine’s adaptation to EU institutional standards and the popularization of successful European practices of agglomeration and their management. It is proposed that experts from EU member states be involved in training representatives of Ukrainian agglomerations and transferring their relevant experience. Simultaneously, the feasibility of broader use of Nudge technologies, gamification tools, and advocacy for positive changes is emphasized to level the destructive impact of institutional traps on the quality of the investment climate of agglomerations and on the efficiency of using their resource potential. It is proposed that agglomerations be provided with clear signs of their industry specialization based on existing competitive advantages and economic traditions of development of their communities. 

institutional traps, agglomerations, economic development, governance mechanisms, regional economy, post-war recovery