Lake (1996) presents a theory of contracting whereby organizational choice in
security relations - which varies on a continuum from anarchic alliances to
hierarchic empires - is determined by considerations of transaction costs and
the expected costs of opportunism. International lawyers have similarly applied
transaction costs economics to explain various governance structures in the
international system (Aceves, 1996; Trachtman, 1997). Even the existence of
sovereign territorial states themselves, as a form of international
institutionalization, has been explained through this lens (Spruyt, 1994).