Transnational institutions in which states, firms, and NGOs cooperate to govern the adverse consequences of global corporate conduct vary in their institutional designs. Although these arrangements are typically concerned with situations characterized by enforcement problems, they often lack the institutional mechanisms considered necessary for effectively dealing with these problems. Extant rational choice theories of international cooperation are weak in explaining the creation and persistence of such inefficient institutions. I propose a political model of transnational institutional design that highlights the importance of distributional conflicts and power. I argue that states, firms, and NGOs use multiple forms of power, such as economic, institutional and network power to secure favorable institutional choices and that the extent to which different forms of power are effective and efficient means of influence is systematically conditioned by two contextual factors: informality of the institutional context and transparency of negotiations. Specific combinations of these conditions affect whether economic, institutional or network power confer influence over the outcomes of tripartite institutional bargaining. Integrating case study methods and statistical analysis I draw on rich original data from the Kimberley Process on the regulation of "blood diamonds" to probe the explanatory power of my model.
