Globalization creates lucrative opportunities for traffickers of drugs, dirty money, blood diamonds, weapons, and other contraband. Effective countermeasures require international collaboration, but what if some countries suffer while others profit from illicit trade? Only international institutions with strong compliance mechanisms can ensure that profiteers will not dodge their law enforcement responsibilities. However, the effectiveness of these institutions may also depend on their ability to flexibly adjust to fast-changing environments. Combining international legal theory and transaction cost economics, this book develops a novel, comprehensive framework which reveals the factors that determine the optimal balance between institutional credibility and flexibility. The author tests this rational design paradigm on four recent anti-trafficking efforts: narcotics, money laundering, conflict diamonds, and small arms. She sheds light on the reasons why policymakers sometimes adopt suboptimal design solutions and unearths a nascent trend toward innovative forms of international cooperation which transcend the limitations of national sovereignty.

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