We are grateful to seminar participants at McGill and Columbia Universities for helpful comments, to Dick Nelson for drawing our attention to the Hodgson book, to Oliver Williamson for clarifying several points, and to Joanne Gowa, Steve Krasner, and two anonymous referees.

1. Subsets of and alternative names for the new economics of organization include the new institutional economics, transaction cost economics, and the economics of property rights. Examples of NEO treatments of various institutions include the following: Pollak, Robert A., “A Transaction Cost Approach to Families and Households,” Journal of Economic Literature 23 (06 1985), pp. 581–608Google Scholar; Poulson, Barry W., “The Family and the State,” in Peden, Joseph R. and Glahe, Fred R., eds., The American Family and the State (San Francisco: Pacific Research Institute, 1986), pp. 49–80Google Scholar; Putterman, Louis, The Economic Nature of the Firm (Cambridge: Cambridge University Press, 1986)Google Scholar; Leibenstein, Harvey, Inside the Firm (Cambridge, Mass.: Harvard University Press, 1987)CrossRefGoogle Scholar; Yoshino, M. Y. and Lifson, Thomas B., The Invisible Link (Cambridge, Mass.: MIT Press, 1986)Google Scholar; North, Douglass C., Structure and Change in Economic History (New York: Norton, 1981)Google Scholar; Winship, Christopher and Rosen, Sherwin, eds., Organizations and Institutions, supplement to American Journal of Sociology, vol. 94, 1988Google Scholar; and Yarbrough, Beth V. and Yarbrough, Robert M., “Free Trade, Hegemony, and the Theory of Agency,” Kyklos, vol. 38, no. 3, 1985, pp. 348–64CrossRefGoogle Scholar. A useful collection of articles can be found in four special issues of the Journal of Institutional and Theoretical Economics 140–43 (03 1984, March 1985, March 1986, and March 1987)Google Scholar.

2. The “black box” terminology symbolizes (among both economists and political scientists) acknowledgement of the limitations of traditional noninstitutional approaches. See, for example, Aoki, Masahiko, The Co-Operative Game Theory of the Firm (Oxford: Oxford University Press, 1984), pp. 4, 10, and 52Google Scholar; Haggard, Stephan and Simmons, Beth A., “Theories of International Regimes,” International Organization 41 (Summer 1987), pp. 497 and 513CrossRefGoogle Scholar; Alchian, Armen A. and Woodward, Susan, “The Firm Is Dead; Long Live the Firm,” Journal of Economic Literature 26 (03 1988), p. 65Google Scholar; Ikenberry, G. John et al. , “Introduction: Approaches to Explaining American Foreign Economic Policy,” International Organization 42 (Winter 1988), p. 3Google Scholar; Ikenberry, G. John, “Conclusion: An Institutional Approach to American Foreign Economic Policy,” International Organization 42 (Winter 1988), p. 242Google Scholar; Langlois, Richard N., “What Was Wrong with the ‘Old’ Institutional Economics? (And What Is Still Wrong with the ‘New’?)” Department of Economics Working Paper, University of Connecticut, 1988, p. 30Google Scholar; and Williamson, , Economic Institutions of Capitalism, p. 15Google Scholar.

3. The “unidirectional” nature of this review article should not be construed to imply that NEO could not be strengthened by drawing on the insights of international relations theorists.

4. Strange, Susan, States and Markets (New York: Basil Blackwell, 1988), pp. 18 and 19Google Scholar.

5. In “What Was Wrong?” Langlois traces the relationship between the “old” institutionalists and more modem work in NEO. A useful collection of modern papers in the institutionalist tradition can be found in two special issues of the Journal of Economic Issues 21 (09 and 10 1987)Google Scholar. Continuing work by economists in this tradition is often referred to as “neo-institutionalism” to distinguish it from the “new institutionalism” associated with Williamson's work and other related approaches.

6. See Coase, Ronald, “The New Institutional Economics,” Journal of Institutional and Theoretical Economics 140 (03 1984), pp. 229–30Google Scholar. Coase's criticism is virtually identical to Keohane's admonitions to scholars of the reflective school of international relations. See Keohane, Robert O., “International Institutions: Two Approaches,” International Studies Quarterly 32 (12 1988), pp. 379–96CrossRefGoogle Scholar. On the shortcomings of the “old” institutionalism, see also Hodgson, , Economics and Institutions, pp. 21–24Google Scholar.

7. Langlois, “What Was Wrong?”

8. See Williamson, Oliver E., “Reflections on the New Institutional Economics,” Journal of Institutional and Theoretical Economics 141 (03 1985), p. 188Google Scholar. Hodgson remains somewhat more in line with the older institutionalists in his continued emphasis on methodological criticism; see especially Economics and Institutions, chaps. 2–4.

9. Barzel, Yoram, “Transaction Costs: Are They Just Costs?” Journal of Institutional and Theoretical Economics 141 (03 1985), p. 15Google Scholar. Hodgson uses the Walrasian auctioneer to demonstrate that even markets are “social institutions”; see Economics and Institutions, chap. 8.

10. As discussed in a subsequent section of this article and in footnote 89, NEO cannot itself delimit the range of social relations questions that fit this description.

11. Leibenstein, , Inside the Firm, p. viiiGoogle Scholar.

12. Williamson, , Economic Institutions of Capitalism, pp. 204–5Google Scholar. Gowa, Joanne makes a related argument about the relevance of prisoners' dilemma for international relations in “Anarchy, Egoism, and Third Images,” International Organization 40 (Winter 1986), pp. 167–86CrossRefGoogle Scholar.

13. Simon, Herbert, Administrative Behavior, 2d ed. (New York: Macmillan, 1961), p. xxivGoogle Scholar (1st ed. published in 1947). See also Langlois, Richard N., “Rationality, Institutions, and Explanation,” in Langlois, Richard N., ed., Economics as a Process (Cambridge: Cambridge University Press, 1986), pp. 225–55Google Scholar.

14. See Williamson, , Economic Institutions of Capitalism, pp. 30–32 and 44–47Google Scholar; and Hodgson, Economics and Institutions, chaps. 5 and 6.

15. Williamson, , Economic Institutions of Capitalism, p. 57Google Scholar.

16. Ibid., p. 47; see also pp. 30–32, 47–52, and 64–67.

17. Heiner argues that uncertainty is the basic source of regularity in behavior. See Heiner, Ronald A., “Uncertainty, Signal-Detection Experiments, and Modeling Behavior,” in Langlois, , Economics as a Process, pp. 59–115Google Scholar.

18. In the economics literature on uncertainty, as in game theory or decision theory, a “state of the world” refers to one of many alternative situations that might arise.

19. Williamson, , Economic Institutions of Capitalism, pp. 66–67Google Scholar.

20. Ibid., pp. 56–59.

21. Keohane, Robert and Nye, Joseph, “Power and Interdependence Revisited,” International Organization 41 (Autumn 1987), p. 730CrossRefGoogle Scholar.

22. See Benjamin, Roger and Duvall, Raymond, “The Capitalist State in Context,” in Benjamin, Roger and Elkin, S., eds., The Democratic State (Lawrence: University of Kansas Press, 1985), pp. 19–57Google Scholar; and Ikenberry, G. John, “The State and Strategies of International Adjustment,” World Politics 39 (10 1986), especially pp. 54–55CrossRefGoogle Scholar. A similar question about institutions more generally is raised by Field, Alexander J. in “The Problem with Neoclassical Institutional Economics,” Explorations in Economic History 18 (04 1981), p. 183CrossRefGoogle Scholar.

23. Jackson distinguishes between juridical statehood based on “negative” sovereignty, or the right of self-determination, and empirical statehood based on “positive” sovereignty, or a capacity for effective and civil government. See Jackson, Robert H., “Quasi-States, Dual Regimes, and Neoclassical Theory,” International Organization 41 (Autumn 1987), p. 529CrossRefGoogle Scholar.

24. For useful guides to these issues, see Wendt, Alexander E., “The Agent-Structure Problem in International Relations Theory,” International Organization 41 (Summer 1987), pp. 335–70CrossRefGoogle Scholar; and Dessler, David, “What's at Stake in the Agent-Structure Debate?” International Organization 43 (Summer 1989), pp. 441–74CrossRefGoogle Scholar. See also Hodgson, , Economics and Institutions, p. 70Google Scholar.

25. Langlois defines a compositional principle as a proposition “about how the individual behavior links up or ties together to form the aggregate result.” See “What Was Wrong?” p. 20.

26. See Langlois, , “What Was Wrong?” especially pp. 25–30Google Scholar; and Seyfert, Wolfgang, “A Weberian Analysis of Economic Progress,” Journal of Institutional and Theoretical Economics 141 (03 1985), especially pp. 171–73Google Scholar.

27. Reductionism is an explanation of the whole based solely on behavior of the parts. Methodological holism claims distinct aims and interests for social wholes and suggests that they are sufficient levels of analysis. “Structure” refers to the distribution of capabilities among units, and “process” refers to the ways in which the units relate to each other; see Keohane, and Nye, , “Power and Interdependence Revisited,” p. 745Google Scholar. Although neoclassical economics is strongly identified with methodological individualism, the standard economic treatment of the firm as a monolithic profit-maximizing entity is vulnerable to charges of methodological holism or reification, as are many economic treatments of the household or family. For discussions of these issues and their relationship to the study of international relations, see Wendt, “The Agent-Structure Problem”; and Dessler, “What's at Stake?”

28. Hodgson, , Economics and Institutions, p. 68Google Scholar.

29. Smith, Adam, An Inquiry into the Nature and Causes of the Wealth of Nations (1776Google Scholar; reprint, New York: Modern Library, 1937), p. 423.

30. Krasner, Stephen D., “Structural Causes and Regime Consequences,” in Krasner, Stephen D., ed., International Regimes, special issue of International Organization 36 (Spring 1982), p. 5Google Scholar.

31. Commons, John, Institutional Economics (New York: Macmillan, 1934), p. 4Google Scholar. For a discussion of the importance of Commons' insight for the future of NEO work, see Yarbrough, Beth V. and Yarbrough, Robert M., “The Transactional Structure of the Firm,” Journal of Economic Behavior and Organization 10 (06 1988), pp. 1–28CrossRefGoogle Scholar.

32. Commons, John, The Economics of Collective Action (Madison: University of Wisconsin Press, 1950), pp. 21 and 118Google Scholar.

33. Llewellyn, Karl N., “What Price Contract?” Yale Law Journal 40 (05 1931), pp. 736–37CrossRefGoogle Scholar. This view has obvious origins in Emile Durkheim's The Division of Labor in Society and in Talcott Parsons' The Structure of Social Action.

34. Benson, Bruce L., “The Spontaneous Evolution of Commercial Law,” Southern Economic Journal 55 (09 1988), p. 649Google Scholar. This suggests parallels with international law, much of which is explicitly “created” through treaties and other forms of bargaining and agreements.

35. Williamson, , Economic Institutions of Capitalism, pp. 68–84Google Scholar.

36. The nature of the firm is the question that has received the most attention from NEO analysts. The characterization of “the governing firm” in this review article draws heavily on Williamson's work, which represents the single most fully developed NEO argument. Not only has Williamson been a central contributor to NEO, but his framework is also the basis for a growing body of empirical work—a singular accomplishment. Some of that empirical work is surveyed by Joskow, Paul L. in “Asset Specificity and the Structure of Vertical Relationships: Empirical Evidence,” Journal of Law, Economics, and Organization 4 (Spring 1988), pp. 95–118Google Scholar.

37. Legal scholars have increasingly acknowledged the limits of legal centralism and the importance of private ordering (private negotiation and arbitration within a flexible contractual framework) as a means of dispute settlement, especially in relationships in which continuity is valued. See Llewellyn, “What Price Contract?”; Macaulay, Stewart, “Non-Contractual Relations in Business,” American Sociological Review 28 (01 1963), pp. 55–70CrossRefGoogle Scholar; MacNeil, Ian R., “The Many Futures of Contracts,” Southern California Law Review 47 (05 1974), pp. 691–816Google Scholar; MacNeil, Ian R., “Contracts,” Northwestern University Law Review 72 (01–02 1978), pp. 854–906Google Scholar; Galanter, Marc, “Justice in Many Rooms,” Journal of Legal Pluralism, vol. 19, 1981, pp. 1–47CrossRefGoogle Scholar; Kronman, Anthony T., “Contract Law and the State of Nature,” Journal of Law, Economics, and Organization 1 (Spring 1985), pp. 5–32Google Scholar; and Benson, ”Spontaneous Evolution of Commercial Law.”

38. Uncertainty and frequency of transacting are the other dimensions of transactions that play important roles.

39. See Williamson, , Economic Institutions of Capitalism, pp. 61–63Google Scholar. See also Polanyi, Karl, The Great Transformation (New York: Rinehart, 1944)Google Scholar.

40. For arguments along this line in international relations, see Krasner, Stephen D., “Approaches to the State,” Comparative Politics 16 (01 1984), pp. 223–46CrossRefGoogle Scholar; and Gowa, Joanne, ”Bipolarity, Multipolarity, and Free Trade,” American Political Science Review 83 (12 1989), pp. 1245–56CrossRefGoogle Scholar. See also Wagner, R. Harrison, “Economic Interdependence, Bargaining Power, and Political Influence,” International Organization 42 (Summer 1988), pp. 479–80CrossRefGoogle Scholar. Wagner points out “important differences… between negotiating a new aid or trade relationship and renegotiating an existing one,” but he seemingly fails to account for the possibility of a “fundamental transformation” within a relationship. In Economics and Institutions, p. 301, Hodgson makes the more general point that the relative costs of various forms of organization depend in part on the status quo.

41. The classic example is the relationship between General Motors and Fisher Body. For a history of the relationship, see Klein, Benjamin, Crawford, Robert, and Alchian, Armen, “Vertical Integration, Appropriable Rents and the Competitive Contracting Process,” Journal of Law and Economics 21 (10 1978), pp. 297–326CrossRefGoogle Scholar; and Klein, Benjamin, “Vertical Integration as Organizational Ownership: The Fisher Body-General Motors Relationship Revisited,” Journal of Law, Economics, and Organization 4 (Spring 1988), pp. 199–213Google Scholar.

42. In “Contract Law and the State of Nature,” Kronman provides an extensive discussion of the efficacy of hostages or bonds in a world of private ordering. For a discussion of the use of hostage-like arrangements in international trade, see Yarbrough, Beth V. and Yarbrough, Robert M., “Reciprocity, Bilateralism, and Economic ‘Hostages,’” International Studies Quarterly 30 (03 1986), pp. 7–21CrossRefGoogle Scholar.

43. Williamson, , Economic Institutions of Capitalism, p. 34Google Scholar.

44. See Keohane, Robert O., “Reciprocity in International Relations,” International Organization 40 (Winter 1986), pp. 1–28CrossRefGoogle Scholar; and Yarbrough and Yarbrough, “Reciprocity.”

45. Conversely, in “Quasi-States,” Jackson argues that such definitions of the state imply that many Third World “quasi-states,” particularly the governments of much of Africa, fail to qualify.

46. Rejai, Mostafa and Enloe, Cynthia H., “Nation-States and State-Nations,” International Studies Quarterly 13 (06 1969), pp. 23–37CrossRefGoogle Scholar.

47. See North, Structure and Change in Economic History; Levi, Margaret, Of Rule and Revenue (Berkeley: University of California Press, 1988)Google Scholar; and Strange, , States and Markets, pp. 39–42Google Scholar.

48. North, Structure and Change in Economic History.

49. This point is emphasized by Strange in States and Markets, p. 40.

50. See Ekelund, Robert B. Jr, and Tollison, Robert D., Mercantilism as a Rent-Seeking Society (College Station: Texas A&M Press, 1981)Google Scholar.

51. See, for example, Baldwin, David, Economic Statecraft (Princeton, N.J.: Princeton University Press, 1985)Google Scholar; Rosecrance, Richard, The Rise of the Trading State (New York: Basic Books, 1986)Google Scholar; Ikenberry, G. John et al. , eds., The State and American Foreign Economic Policy, special issue of International Organization 42 (Winter 1988)Google Scholar; and Strange, States and Markets.

52. Ness and Brechin characterize varying “permeability” of boundaries as an aspect of “varying sovereignty,” since “some states effectively control their boundaries, [while] others have little control.” See Ness, Gayl D. and Brechin, Steven R., “Bridging the Gap: International Organizations as Organizations,” International Organization 42 (Spring 1988), pp. 254–55CrossRefGoogle Scholar. If, however, permeability of boundaries is a choice variable, then permeability would not necessarily reflect weak sovereignty.

53. Quote from Francis Edgeworth's 1925 “Papers Relating to Political Economy,” cited in Viner, Jacob, Studies in the Theory of International Trade (Clifton, N.J.: Augustus M. Kelley, 1975), p. 595Google Scholar.

54. This expression of the problem was suggested to us by an anonymous reviewer.

55. Hobbes, Thomas, Leviathan (1651Google Scholar; reprint, New York: Macmillan, 1962), p. 245.

56. Smith, , Wealth of Nations, p. 111Google Scholar.

57. Strange, Susan, “Protection and World Politics,” International Organization 39 (Spring 1985), p. 234CrossRefGoogle Scholar.

58. See North, Structure and Change in Economic History; Levi, Of Rule and Revenue; and Brennan, Geoffrey and Buchanan, James, The Reason of Rules (Cambridge: Cambridge University Press, 1985)Google Scholar.

59. Oye, Kenneth A., ed., Cooperation Under Anarchy (Princeton, N.J.: Princeton University Press, 1986)Google Scholar.

60. Anarchy in the sense of the absence of formal supranational government does not rule out cooperation, coordination, and informal forms of governance, as Bull, Hedley argues in The Anarchical Society (London: Macmillan, 1977)CrossRefGoogle Scholar. For an interpretation of trade institutions as forms of private ordering, see the following articles by Yarbrough, Beth V. and Yarbrough, Robert M.: “Cooperation in the Liberalization of International Trade,” International Organization 41 (Winter 1987), pp. 1–26CrossRefGoogle Scholar; “Institutions for the Governance of Opportunism in International Trade,” Journal of Law, Economics, and Organization 3 (Spring 1987), pp. 129–39Google Scholar; and “Economic Integration and Governance: The Role of Preferential Trade Agreements,” Journal of International Economic Integration(forthcoming).

61. See Williamson, Oliver E., “The Economics of Organization,” American Journal of Sociology 87 (11 1981), pp. 573–74CrossRefGoogle Scholar; and Leibenstein, , Inside the Firm, p. 1Google Scholar. For an evaluation of the usefulness of NEO for the study of public bureaucracy, see Moe, Terry M., “The New Economics of Organization,” American Journal of Political Science 28 (11 1984), pp. 739–77CrossRefGoogle Scholar.

62. Granovetter, Mark, “Economic Action and Social Structure,” American Journal of Sociology 91 (11 1985), p. 488CrossRefGoogle Scholar.

63. The most influential functionalist works include the following: Radcliffe-Brown, A. R., “On the Concept of Function in Social Science,” American Anthropologist 37 (Spring 1935), pp. 1–32CrossRefGoogle Scholar; Malinowski, Bronislaw, A Scientific Theory of Culture and Other Essays (Chapel Hill: University of North Carolina Press, 1944).Google Scholar; and Goldschmidt, Walter, Comparative Functionalism (Berkeley: University of California Press, 1966)Google Scholar. For important criticisms of functionalism in the social sciences, see Merton, Robert, “Manifest and Latent Functions,” in Merton, Robert, ed., Social Theory and Social Structure (New York: Free Press, 1947), pp. 19–84Google Scholar; Turner, Jonathan H. and Maryanski, A., Functionalism (Menlo Park, Calif.: Benjamin/Cummings, 1979)Google Scholar; Elster, Jon, Explaining Technical Change (Cambridge: Cambridge University Press, 1983)Google Scholar; and Dow, Gregory K., “The Function of Authority in Transaction Cost Economics,” Journal of Economic Behavior and Organization 8 (03 1987), pp. 13–38, especially sec. 4CrossRefGoogle Scholar.

64. See Elster, Explaining Technical Change. See also Dessler, “What's at Stake?” for a discussion of Kenneth Waltz's narrow focus on unintended rules as opposed to intended rules.

65. Axelrod suggests that one possible “evolutionary” approach is based on the principle that “what works well for a player is more likely to be used again, while what turns out poorly is more likely to be discarded.” See Axelrod, Robert, “An Evolutionary Approach to Norms,” American Political Science Review 80 (12 1986), pp. 1095–111CrossRefGoogle Scholar. See also Williamson, Economic Institutions of Capitalism. Based on his insistence on a comparative institutional perspective, Williamson subscribes to what he calls “weak-form selection,” a process whereby “fitter” institutions survive even though they may not be “the fittest” in an absolute sense (p. 23). He also notes that “‘flawed’ modes of economic organization for which no superior feasible mode can be described are, until something better comes along, winners nonetheless” (p. 408).

66. Simon, Herbert, “Rationality as Process and as Product of Thought,” American Economic Review Papers and Proceedings 68 (05 1978), p. 3Google Scholar.

67. On the teleological and compositional fallacies, see Turner and Maryanski, Functionalism; and Langlois, “What Was Wrong?”

68. See Neale, Walter C., “Institutions,” Journal of Economic Issues 21 (09 1987), pp. 1177–206CrossRefGoogle Scholar; Dow, , “Function of Authority,” especially pp. 27–28Google Scholar; and Schotter, Andrew, “The Evolution of Rules,” in Langlois, , Economics as a Process, pp. 117–33Google Scholar. Among the “old” institutionalists, Commons believed that Veblen seriously underestimated the volitional or purposive component of institutions and that this led Veblen to overemphasize the extent to which institutions merely bind society to the past. See Commons, John, Institutional Economics (New York: Macmillan, 1934)Google Scholar; and Legal Foundations of Capitalism (New York: Macmillan, 1924)Google Scholar.

69. Haggard, and Simmons, , “Theories of International Regimes,” pp. 507–9Google Scholar.

70. Leibenstein, , Inside the Firm, p. 131Google Scholar. See also Gordon, Wendell, “Orthodox Economics and Institutionalized Behavior,” in Thompson, Carey C., ed., Institutional Adjustment (Austin: University of Texas Press, 1967), pp. 41–67Google Scholar; Krasner, , “Approaches to the State,” especially pp. 240–43Google Scholar; Ikenberry, “Conclusion”; and Goldstein, Judith, “The Impact of Ideas on Trade Policy,” International Organization 43 (Winter 1989), pp. 31–72CrossRefGoogle Scholar.

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72. For example, in its study of the firm, NEO has yet to definitively answer why transactions of firms in some cultures can be handled through the market (for example, by subcontracting), while similar transactions in other cultures require vertical integration. See Williamson, , Economic Institutions of Capitalism, pp. 120–30Google Scholar; Yarbrough, Beth V. and Yarbrough, Robert M., ”Specific Subcontracting and Industrial Organization in Japan: Some Empirical Evidence on the Transaction-Costs Approach,” Department of Economics Working Paper, Amherst College, 1986Google Scholar; and Hamilton, Gary G. and Biggart, Nicole W., “Market, Culture, and Authority: A Comparative Analysis of Management and Organization in the Far East,” American Journal of Sociology 94 (1988 Supplement), pp. S52–94.CrossRefGoogle Scholar. The presence or absence of cooperation in various issue-areas raises similar questions for international relations. See Lipson, Charles, “International Cooperation in Economic and Security Affairs,” World Politics 37 (10 1984), pp. 1–23CrossRefGoogle Scholar; Ness, and Brechin, , “Bridging the Gap,” p. 271Google Scholar; and Young, “The Politics of International Regime Formation.”

73. See Keohane, “International Institutions”; Haggard, and Simmons, , “Theories of International Regimes,” pp. 508–9Google Scholar; and Ness, and Brechin, , “Bridging the Gap,” p. 248Google Scholar.

74. To further complicate matters, an institution may cease to serve the original beneficiary group and begin to serve another. “Capture” theories of economic regulation, for example, posit that agencies designed to regulate industries in pursuit of social goals are often captured by those very industries. See Stigler, George, “The Economic Theory of Regulation,” Bell Journal of Economics and Management Science 2 (Spring 1971), pp. 3–21CrossRefGoogle Scholar. However, capture theories are largely devoid of institutional considerations, as noted by Joseph Kalt, P. and Zupan, Mark A. in “Capture and Ideology in the Economic Theory of Politics,” American Economic Review 74 (06 1984), pp. 279–300Google Scholar.

75. See Klein, Crawford, and Alchian, “Vertical Integration, Appropriable Rents”; and Klein, “Vertical Integration as Organizational Ownership.”

76. Williamson explicitly recognizes the possibility of undesirable social outcomes (such as the exploitation of monopoly power) from “efficient” governance structures, although he considers monopoly power an inadequate and overemphasized explanation for observed governance structures. See Economic Institutions of Capitalism, p. 17.

77. Hodgson uses the possibility that the private and social valuations of “opportunism” differ to argue that the key in Williamson's work is not opportunism per se; rather, it is simply uncertainty as to whether or not a contract will be fulfilled. See Economics and Institutions, p. 205.

78. Footnote 37 provides a few examples.

79. Williamson, Economic Institutions of Capitalism, chaps. 7 and 8.

80. Ibid., p. 203.

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82. See Benson, “Spontaneous Evolution of Commercial Law.”

83. See Keohane, Robert O., After Hegemony (Princeton, N.J.: Princeton University Press, 1984), p. 258Google Scholar; and Young, , “The Politics of International Regime Formation,” p. 354Google Scholar.

84. Hall, John A. and Ikenberry, G. John, The State (Minneapolis: University of Minnesota Press, 1989), p. 95Google Scholar. See also Strange, , States and Markets, p. 40Google Scholar.

85. See Williamson, , Economic Institutions of Capitalism, pp. 397–401Google Scholar. For an economicsoriented discussion of contract enforcement and defense against breach, see Cooter, Robert and Ulen, Thomas, Law and Economics (Glenview, Ill.: Scott, Foresman, 1988), chaps. 6 and 7Google Scholar.

86. In “Spontaneous Evolution of Commercial Law,” Benson uses the evolution of the medieval lex mercatoria as evidence to refute the argument that the state is essential even for effective formal law.

87. See Krasner, , “Approaches to the State,” especially pp. 229–30Google Scholar; and Williamson, , Economic Institutions of Capitalism, pp. 20–21 and 164–66Google Scholar.

88. For example, “old” institutionalist Walton Hamilton characterized the “world of use and wont” as a “tangled and unbroken web of institutions.” See Hamilton, Walton, “Institutions,” in Seligman, Edwin R. A. and Johnson, Alvin, eds., Encyclopedia of the Social Sciences, vol. 8 (New York: Macmillan, 1932), pp. 84–89Google Scholar. For several critiques of the liberal and Grotian perspective on institutions, see the following in Krasner, , International Regimes: Krasner, Stephen D., “Structural Causes and Regime Consequences,” pp. 1–21Google Scholar; Puchala, Donald J. and Hopkins, Raymond F., “International Regimes,” pp. 61–91Google Scholar; Young, Oran R., “Regime Dynamics,” pp. 93–113.Google Scholar; and Krasner, Stephen D., “Regimes and the Limits of Realism,” pp. 355–68Google Scholar. See also Nye, Joseph S. Jr, “Neorealism and Neoliberalism,” World Politics 40 (01 1988), pp. 235–51CrossRefGoogle Scholar.

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