The transaction-costs approach to economics evolved from efforts to understand the contractual and organizational variety observed among firms. Once viewed as attempts at collusion or monopolization, many of these variations are now recognized as well-or insteadas efficient methods for safeguarding transactions in the presence of bounded rationality and opportunism (see for example, MacNeil; Telser; Kronman; Williamson, 1985). Gradually, these insights have spread from analyses of the firm to studies of other institutions. However, with the exception of some applications of transaction-costs methods to multinational enterprises (Rugman; Caves), the economic theory of international trade remains dominated by approaches that cannot explain the variety of international institutions that have evolved historically to facilitate trade. Exceptions are attempts by political scientists and economic historians to explain historically observed institutional variety in international trade. Important examples include the hegemonic stability hypothesis positing the dependence of trade liberalization on the presence of a hegemonic country (Kindleberger), regime theory asserting the importance