International Law | Law | Law and Economics
European Legal Studies Center
Center for Law and Economic Studies
Center on Global Governance
Economic theory suggests that international institutions cannot simultaneously widen and deepen. There is an inevitable trade-off between the benefits of site and the costs of heterogeneity. Consequently, institutions ought to be either small and deep or, alternatively, large and shallow. Yet in reality, we observe that international institutions embrace new members while concurrently pursuing deeper cooperation. This Article seeks to explain how institutions evolve over time in light of this size/heterogeneity trade-off It examines the strategic responses of members of institutions to heterogeneity costs and identifies two distinct yet related strategies that allow states to pursue gains from cooperation while suppressing heterogeneity costs: states seek to reduce the heterogeneity costs by either overriding the preferences of prospective or incumbent member states (consent tailoring) or, alternatively, by pursuing the strategy of accommodation through institutional adjustment (institutional tailoring). The chosen strategy is determined by the relative bargaining power of the members of the institution. Explaining the likely occurrence and expected sequence of these two strategies paves the way for a descriptive theory of institutional change. At the same time, this analytical framework explains how and why institutions have evolved to be both wider and deeper over time, contrary to the predictions of many economists.
How International Institutions Evolve,
Chi. J. Int'l L.
Available at: https://scholarship.law.columbia.edu/faculty_scholarship/1971