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The Contractual Role of Boundaries: Law and Economics Meets International Organization

Amherst College

Robert M. Yarbrough

Amherst College

Without universally efficacious contract enforcement, contracting boundaries divide the world into ‘insiders’, with whom we contract freely, and ‘outsiders’, with whom contracting is circumscribed. Boundary types vary and vacillate between territorially defined ones and ones defined on nonterritorial margins (religion, ethnicity or functional specialization). Sovereignty, or sole legal constitutional authority, has always existed alongside other, less formal systems of contractual enforcement. Both early law and economics and early International Relations theory largely ignored this interacting, overlapping web of enforcement institutions; and recent world events highlight the limitations of theories in which the nature of boundaries — and hence the nature of entities themselves — has little impact on the nature of predicted interactions. The contracting branch of law and economics contains useful insights into the material functions of boundaries, the strengths and weaknesses of different types of boundary-maintenance devices, the characteristics necessary for ‘successful’ boundaries and why different types of boundaries might emerge or persist under different conditions. These insights suggest that the coexistence of and historical vacillation between territorially defined boundaries and ones defined on nonterritorial margins should not come as a surprise.

Key Words: boundaries • contracting • ethnicity • international organization • nations • new institutional economics • religio • state • territoriality

European Journal of International Relations, Vol. 9, No. 4, 543-590 (2003)
DOI: 10.1177/135406610394002


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