Markets, Institutions, and Property Rights Disputes

Abstract

This chapter describes how politics normally functions in the global economy. In normal economic exchange environments, prices are set by supply and demand conditions in the market. Without an ability to affect prices, political actors largely focus their efforts on coordinating or manipulating the effects of the market price. To promote efficiency in the global political economy, states have created a variety of institutions that promote coordination and cooperation through the reduction of transaction costs and the creation and maintenance of property rights. At the global level, territorial borders and maritime boundaries delineate international property rights among states. When disagreements over the sovereign control of territorial and maritime resources arise, international institutions can provide an effective mechanism for resolving these property rights disputes.