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Trading Control: National Chiefdoms within International Organizations

According to Principal-Agent theory, states (the principal) delegate the implementation of a legalized agreement to an international organization (the agent). The conventional wisdom about states’ capacity to control international organizations is that differences among the member states impede control and consequently enhance the agent’s autonomy, whereas agreement allows for effective control and limited autonomy. Contrary to this conventional wisdom, this article argues that conflicts among states need not impede effective control. On the contrary: it harbors gains from the exchange of informal control over an organization’s divisions. As a result, international organizations exhibit informal spheres of influence, or national chiefdoms. The article demonstrated the theory’s plausibility using the example of the EU. It has implications for the literature on delegation and informal governance.