Institution reformation is a main aspect of Chinese reformation of economical system, however, it drop behind other aspects heavily because of the absence of the admission about institution market. By demonstrational investigating Chinese institution reformation, analyzing problems of the reformation, and putting institution in the macro system of market economy, this paper has proved the existence of institution market. The bound and classification is studied for solving the system problem and mechanism problem of institution．According to the principle of public economics t institution is redefined as a kind of nonprofit organization that engages comm onweal service．As a kernel of institution reformation．the property right system reformation of institution is studied．Furthermore，institution is classified via two methods．The concept of fundamental institution that is sponsored by government is specially submitted so that government can play a supporting and directing role in the field of commonweal service．