Abstract

Security relations between states vary along a continuum from anarchic alliances to hierarchic empires. This continuum, in turn, is defined by the parties' rights of residual control. The state's choice between alternatives is explained in a theory of relational contracting as a function of the expected costs of opportunism, which decline with relational hierarchy, and governance costs, which rise with relational hierarchy. A comparison of early postwar relations between the United States and Western Europe and the Soviet Union and Eastern Europe illustrates the theory.