Credible Commitments, Discrimination, and the Institutions of European Integration
Theorists of international cooperation recognize that delegating powers to international organizations (IOs) such as the European Union (EU) lend credibility to national governments' commitments, thereby sustaining cooperation. Numerous works thus analyze EU politics using transaction cost politics and principal-agent models. What has been largely neglected, however, is that not all IOs (and certainly not the EU) are simple enforcement automata. Very complex, non-unitary IOs cannot be understood without endogenizing their complexity. To address this issue, I analyze the situation where two national governments seek to cooperate in a game with mixed motives. Anticipating opportunism, they consider delegating powers to a simple, unitary IO. But, this cannot be an equilibrium institution, for the monopolisitic power conferred on the IO creates an incentive for it to discriminate between the two governments at the implementation stage. The national governments will anticipate this and may design an IO with internal checks and balances. In an empirical section I derive implications and illustrate with an analytic narrative of European integration.