Institutional selection in international relations: state anarchy as order

By the end of the medieval era, three new competing institutions attempted to capture gains from trade and reduce feudal particularism: sovereign territorial states, cityleagues, and city-states. By the middle of the seventeenth century, city-leagues and city-states had declined markedly. Territorial states survived as the dominant form because they were able to reduce free riding, lower transaction costs, and credibly commit their constituents. The selection process took place along three dimensions. First, sovereign territorial states proved competitively superior in the economic realm. Second, states increasingly recognized only other sovereign territorial states as legitimate actors in the international system. Third, other actors defected to or copied the institutional makeup of sovereign territorial organization. The emergence of discrete territorial units in which only sovereign authorities represented their citizens as the predominant type of organization in international affairs created a new solution to the problem of markets and hierarchies.