A theory of emerging order within institutional complexes: How competition among regulatory international institutions leads to institutional adaptation and division of labor

The article examines the consequences of functional overlap among regulatory international institutions for governance within institutional complexes. Whereas the existing literature assumes that states tend to exploit forum-shopping opportunities to pursue their parochial interests, we show that multiple members of several overlapping institutions operate in a setting of ‘nested games’. They have a general interest in some form of institutional complementarity within the complex and therefore take the implications for overlapping institutions into account when determining their behavior within either of these institutions. On that basis, we show first that the multiple members are likely to induce complementary processes of institutional adaptation, even if their interests diverge with regard to the specific form of institutional rearrangement; second, that a balanced distribution of power among the advocates of different institutions may be expected to produce particularly sophisticated forms of institutional adaptation that do not simply separate the domains of overlapping institutions, but establish patterns of permanent co-governance; and third that state-induced processes of institutional adaptation gradually produce a spontaneously emerging division of labor among overlapping institutions that organizes their governance activities. These theoretical claims are probed by two case studies on institutional complexes that are characterized by sharp distributional conflicts among the multiple members: First, we demonstrate the emergence of a sophisticated division of labor in the institutional complex on international trade in agricultural GMOs. Second, we show that an equally sophisticated division of labor has emerged in the institutional complex on public health-related intellectual property rights.