rather those that focus on the balancers: international institutions(including the general international legal system). Indeed, the threshold issue in many, if not all, international legal blems is that of institutional choice. What institution--market, domestic legislature adjudicatory body or international rule-making body --ought to decide, for example, if one state's intellectual property standards are too low, or another's environmental standards are too high? The answer to questions like these ought to be informed by an understanding of the relative institutional ompetences and capacities of the various alternatives, as well as an appreciation of the strategic interactions among the various institutions We believe that economic analysis may be able to shed substantial light on precisely these sorts of inquiries. Significantly, this form of analysis is not limited to questions of wealth ization.As we note below, if economic analysis were limited to ealth maximiz zation, this would be reason alone to reject, or at least sharply limit the domain of, economic analysis of law In fact, the extension of economic analysis to fields beyond traditional markets requires economics values simultaneously. In this sense, the insights generated by the intersection of international law and law and economics run in two directions: just as economic analysis can deepen our understanding of international law, the application of law and economics to the unique features of the international system helps identify the uses and limitations of economic analysis To develop this thesis, this paper proceeds in seven parts. In Part I, we identify three reasons why international lawyers have not, to date, extensively used economic analysis, and demonstrate that none of these reasons is persuasive. This, " negative argument does not, of course, establish that international lawyers should use economic analysis. In Part Il, we provide a reason to believe that economic analysis will enrich our understanding of international law by oods g the analogy between the market of international relations and traditional markets for While others have alluded to this analogy before, we provide a typology of the ways in which"transactions" in international relations resemble market interactions Those who reject the analogy between international relations and private markets need not reject the economic analysis of international law. In the next three parts of the article, we test the hypothesis that economic analysis will be useful in understanding international law topics that are v explore the applicability of economic analysis to three important international law topics: the nd similar to domestic law topics where economic analysis has been fruitful. Thus, parts Ill, IV allocation of prescriptive jurisdiction, the law of treaties, and the competences of international organizations. In each section, we analogize the international legal issue to a domestic legal issue, and then explore whether the economic methodologies that have been useful domestically can be used on the international plane. Thus, in Part Ill, we outline an analogy between prescriptive jurisdiction and property, and then apply transaction cost economics and economic analysis regarding the design and protection of entitlements to jurisdictional issues. In Part IV, we outline the analogy between treaties and contracts, and explore whether the efficient breach hypothesis and the game theoretic analysis of default rules illuminate our understanding of treaty law. In Part V we analogize international organizations to business firms, and examine whether the theory of the irm can inform current debates over international organizations. To anticipate our conclusions, we will identify certain methodologies included in the new institutional economics and in the public choice branch of economics, such as game theory and transaction cost economics, as having much greater promise than other economic approaches, including price theory used without reference to transaction costs and strategic considerations Of course, like all theoretical approaches, economic analysis has its limitations. In Part VI we outline some of the problems associated with this type of analysis. Some of these problemsrather those that focus on the balancers: international institutions (including the general international legal system). Indeed, the threshold issue in many, if not all, international legal problems is that of institutional choice. What institution -- market, domestic legislature, adjudicatory body or international rule-making body -- ought to decide, for example, if one state’s intellectual property standards are too low, or another’s environmental standards are too high? The answer to questions like these ought to be informed by an understanding of the relative institutional competences and capacities of the various alternatives, as well as an appreciation of the strategic interactions among the various institutions. We believe that economic analysis may be able to shed substantial light on precisely these sorts of inquiries. Significantly, this form of analysis is not limited to questions of wealth maximization. As we note below, if economic analysis were limited to wealth maximization, this would be reason alone to reject, or at least sharply limit the domain of, economic analysis of law. In fact, the extension of economic analysis to fields beyond traditional markets requires economics to revise its approach to maximize additional values, or more accurately, to maximize multiple values simultaneously. In this sense, the insights generated by the intersection of international law and law and economics run in two directions: just as economic analysis can deepen our understanding of international law, the application of law and economics to the unique features of the international system helps identify the uses and limitations of economic analysis. To develop this thesis, this paper proceeds in seven parts. In Part I, we identify three reasons why international lawyers have not, to date, extensively used economic analysis, and demonstrate that none of these reasons is persuasive. This, “negative” argument does not, of course, establish that international lawyers should use economic analysis. In Part II, we provide a reason to believe that economic analysis will enrich our understanding of international law by outlining the analogy between the market of international relations and traditional markets for goods. While others have alluded to this analogy before, we provide a typology of the ways in which “transactions” in international relations resemble market interactions. Those who reject the analogy between international relations and private markets need not reject the economic analysis of international law. In the next three parts of the article, we test the hypothesis that economic analysis will be useful in understanding international law topics that are similar to domestic law topics where economic analysis has been fruitful. Thus, parts III, IV and V explore the applicability of economic analysis to three important international law topics: the allocation of prescriptive jurisdiction, the law of treaties, and the competences of international organizations. In each section, we analogize the international legal issue to a domestic legal issue, and then explore whether the economic methodologies that have been useful domestically can be used on the international plane. Thus, in Part III, we outline an analogy between prescriptive jurisdiction and property, and then apply transaction cost economics and economic analysis regarding the design and protection of entitlements to jurisdictional issues. In Part IV, we outline the analogy between treaties and contracts, and explore whether the efficient breach hypothesis and the game theoretic analysis of default rules illuminate our understanding of treaty law. In Part V, we analogize international organizations to business firms, and examine whether the theory of the firm can inform current debates over international organizations. To anticipate our conclusions, we will identify certain methodologies included in the new institutional economics and in the public choice branch of economics, such as game theory and transaction cost economics, as having much greater promise than other economic approaches, including price theory used without reference to transaction costs and strategic considerations. Of course, like all theoretical approaches, economic analysis has its limitations. In Part VI we outline some of the problems associated with this type of analysis. Some of these problems are 3