Choosing low-cost institutions in global governance

Contemporary global governance takes place not only throughs formal inter-governmental organizations and treaties, but increasingly through diverse institutional forms including informal inter-governmental organizations, trans-governmental networks, and transnational public-private partnerships. Although these forms differ in many ways, they are all what we call 'low-cost institutions' (LCIs): the costs of creating, operating, changing, and exiting them, and the sovereignty costs they impose, are substantially lower on average than those of treaty-based institutions. LCIs also provide substantive and political governance benefits based on their low costs, including reduced risk, malleability, and flexibility, as well as many of the general cooperation benefits provided by all types of institutions. LCIs are poorly-suited for creating and enforcing binding commitments, but can perform many other governance functions, alone and as complements to treaty-based institutions. We argue that the availability of LCIs changes the cost-benefit logic of institutional choice in a densely institutionalized international system, making the creation of new institutions, which existing research sees as the 'last resort', more likely. In addition, LCIs empower executive, bureaucratic, and societal actors, incentivizing those actors to favor creating LCIs rather than treaty-based institutions. The availability of LCIs affects global governance in multiple ways. It reduces the status quo bias of governance, changes its institutional and actor composition, enables (modest) cooperation in times of polarization and gridlock, creates beneficial institutional divisions of labor, and expands governance options. At the same time, the proliferation of LCIs reduces the focality of incumbent institutions, increasing the complexity of governance.