Public Goods, Prisoners' Dilemmas and the International Political Economy

The theory of public goods and prisoners' dilemma games have been widely used to characterize bargaining situations in international political economy. This paper will suggest, using the example of the hegemonic stability thesis with regard to free trade, that there are qualitative differences between public goods and prisoners' dilemmas, leading to several conclusions. First, insofar as international trade has uncooperative aspects, these are more likely to take the form of prisoners' dilemmas than public goods. Second, hegemons should not find free trade to be their first best strategy, particularly when one considers the power of the hegemon within the context of the pure theory of trade. Third, the uncooperative prisoners' dilemma elements in international trade have been exaggerated relative to the incentives for some form of cooperation between the parties to international trade. Fourth, the distinction between prisoners' dilemmas and public goods, though both may lead to uncooperative interaction, is important because the solution strategies, deterrence and compellence, differ in nature and feasibility.