The Strategic Use of International Institutions in Dispute Settlement

Abstract

How does the existence of an international institution change the strategic calculations of states engaged in an international dispute? This paper investigates the question by modeling an international institution as an alternative to bilateral bargaining for a dispute settlement. The equilibrium results show that only one of the two countries may find the option of appealing to an international institution attractive, and that the institution can influence the bargaining outcome even when it is not directly involved in settling the dispute. Moreover, the results show that countries condition their behavior on the type of the institution that they are dealing with: While a high capacity institution can induce cooperation, a low capacity institution does not. These findings have important implications for WTO reforms and provide an explanation for restrictive membership adopted by many significant international institutions.

International institutions and credible commitment of non-democracies

“…Indeed, our second main finding is that as the level of economic reforms increases, non-democracies are more likely than democracies to signal their continued commitment to reforms by remaining as participants rather than becoming graduates. Different domestic conditions present different challenges for states in international relations; therefore, it is quite plausible that states have diverse interests in utilizing such institutions (Fang 2010). In particular, while it has been argued that international institutions can serve as commitment devices for states, it is not obvious that the incentive is similarly strong for all states.…”

Institutional Opposition, Regime Accountability, and International Conflict

“…Recent scholarship provides two insights on the effect of IOs on leaders' conflict behavior: first, state interaction with IOs is a source of information for domestic and foreign audiences; second, the direction of an IO's position on an issue can increase or decrease the costs of the policy action taken by a leader (Chapman and Wolford 2010;Fang 2008Fang , 2010Milner 2006;Thompson 2006Thompson , 2009). Our study builds on these insights, but focuses on how different domestic political institutions may condition the effect of an IO's position taking on a leader's crisis behavior.…”

Bargaining for peace? Strategic forum selection in interstate conflict management

“…Once it is agreed that a third party forum is an acceptable alternative to prolonged conflict, states face the difficult task of identifying a specific third party to intervene, the role that actor will play, and the agenda that the management effort will address. The proliferation of international conflict management fora allows states to compare across available international courts and other intermediaries in order to seek out distributional advantages (Fang 2010;Malintoppi 2006;D. L. Morgan 2002).…”

“…Another, third party management, has only recently been demonstrated to have a similar effect. Manzini and Mariotti (2001) and Fang (2010) both conclude that third party alternatives open the range of mutually acceptable alternatives to constant disagreement in much the same way that the threat of war has on conflict bargaining. Third parties increase bargaining alternatives by directing the distributional outcome of settlement agreements (Bercovitch 2007), either by strategically providing information in order to encourage concessions (Kydd 2003(Kydd , 2006Savun 2008), or by directly making recommendations to the disputants.…”

“…The threat of punishment with economic or political sanctions or other retaliatory measures directly deters states from breaking their commitments to third-party guarantors (Fang 2010). Powerful states may withdraw aid and international organizations, such as the UN Security Council, have the capacity to condemn violations.…”