The development of cross-border cooperation has shown that current cross-border cooperation forms do not allow to perform all tasks. It makes condition for new forms emerging, and each form should be created and operate according to special procedures.

The aim of the paper is describing the forms of interaction of economic actors in the cross-border space and presenting the main characteristics of that forms.

Many different forms of interaction are used in the cross-border cooperation. List of used forms depends on the chosen model of cross-border interaction. Each interaction form requires some transaction costs. Economic actors select the most effective models of interaction among interchangeable models. The effectiveness of the cross-border cooperation models should be evaluated by transaction costs.

Selection of the cross-border interaction model is based on a comparison of total transaction costs for different combinations of the used forms of interaction. The high variability of transaction costs for cross-border interaction causes a change of feasibility of cross-border cooperation, and it influence on the territorial localization of cross-border market.

The interaction in cross-border area is realized by economic actors of cross-border market, central and regional authorities, and international organizations. It forms a particular institutional environment. The transformation of the institutional environment of neighboring countries can both facilitate and hinder the process of cooperation in cross-border area.

Formation and development of effective cross-border interactions in Ukraine depends on the institutional environment. Today institutional environment of cross-border cooperation are not similar in different parts of the Ukrainian border. During the direct interaction the subjects of cross-border markets, in addition to general obstacles, faced with specific obstacles: customs and other charges; restrictions applicable to the movement of goods across the border; different legal, tax and customs systems, different opportunities to use allowance and privileges according to the regional and national legislation of neighboring countries; different quality of regional infrastructure etc.

Economic conditions, including institutional environment, influence the level of transaction costs. It promotes selecting the most effective forms (according to cross-border cooperation participants viewpoint), which in turn changes the institutional environment.

Cross-border cooperation participants follow certain interaction rules only on their own accord. Selection of the cross-border interaction forms usually are resolved by mutual agreement of all the participants. However, sometimes one participant forces other participants for achieving their consent.

Selection of cross-border interaction forms is bounded rational because rationality of the cross-border economic actors is limited by the information they have, the cognitive limitations of their minds, and the finite amount of time they have to make a decision. 

cross-border cooperation, forms of cross-border cooperation, participants of cross-border cooperation, cross-border space, the localization of cross-border market, models of cross-border inteaction, transaction costs, institutional environment