Modern social and economic development is related to ability to generate, absorb and distribute knowledge. Education as process of purposeful upbringing and studying, development and personal growth is fundament of knowledge of absorbed information, skills, comprehension, understanding of what and how one should do. In the conventional sense education is a branch of social sphere that has special place in the economic system and isthe most important factor of social and economic development of society. In modern conditions development of education is followed by phenomena such as internationalization, commercialization, socialization, inclusion that requires new approaches to public regulation of education. In this context it has been offered to consider education as common good, production of which is carried out in favor of person, family, society and state. Education iscommon good because is it characterized by non-excludability, non-competitiveness, inexhaustibility, accessibility, inclusivity, accumulative features, specificity of economic and social expenses, limitation of value law, indefinite reproduction result, universality of provision, invariancy in ways of use. State is responsible for realization of interests of society and has to support certain level of regulation of education as common good, control education quality sothat it could satisfy minimal demand of society. The state takes responsibility to produce educational services, whereas national security, integrity of state and common economic space directly depend on such education. Besides, education is common good of the highest priority from the point of view of state. Thus, public regulation of education is activity of public institutions aimed at provision of normative and legal base, formation of institutionalenvironment, determination of rules and procedures as to formation, distribution and use of natural, social, human, production and financial resources in order to provide education as common good. Basis of stable economic development of state is its institutional environment – precise, well-ordered set of institutions (legal, political, economic, social and cultural) that determine framework conditions of functioning and development of economic subjects andhave significant impact on production of common goods. In summary – influence of economic, legal, social, political, cultural, demographic and technological factors defines changes and transformation of institutional environment and thus, it is necessary to provide its flexibility,adaptivity, stability and effectiveness.