Choosing Low-Cost Institutions In Global Governance

Contemporary global governance is characterized by gridlock in multilateral negotiations, leading to stagnation in the conclusion of multilateral treaties and the creation of formal inter-governmental organizations. At the same time, we see the proliferation of new institutional forms, such as informal inter-governmental organizations, trans-governmental networks, and transnational public-private partnerships. How can we account for this institutional development? While the new institutional forms differ in many ways, we propose that they all constitute low-cost institutions (LCIs): the costs to create, operate and exit from them are all lower than for formal international institutions, including multilateral treaties and formal intergovernmental organizations. LCIs also provide important governance benefits, such as flexibility and the ability to engage and influence bureaucratic and societal actors. In addition to their low costs and governance benefits, LCIs also assign political influence to participating non-state actors. This changes the politics of institutional choice, incentivizing those actors to favor the creation of LCIs over formal organizations. Against this backdrop, we argue that the availability of LCIs changes the cost-benefit logic of institutional choice, making the creation of new institutions – which the dominant approach put forward by Jupille, Mattli, and Snidal sees only as the “last resort” – more likely. We therefore expand the dominant approach, which focuses on formal international institutions, by developing a “logic of institutional choice” that accommodates the creation of diverse types of international institutions. Our approach, unlike that of Jupille, Mattli, and Snidal, can explain why new institutional forms have proliferated, reducing the status quo bias in global governance, expanding governance options, and changing the institutional composition of and prevailing patterns of authority within global governance.