American Political Science Review Vol.83 to lower global barriers to trade after the ply that its"utility function depends posi- war. tively on the well-being"of its allies In short,because an attempt to exploit (Becker 1981,173).Thus,the great power its power in the short run may undermine derives less utility from intraalliance in- that power over time,a nonmyopic,ra- come transfers than from other interna- tional hegemon may reject an optimum tional income transfers (see Conybeare tariff.Although the limit pricing argu- 1987,88). ment does not support an inference that Indeed,each great power in an alliance free trade-the international analogue of may actually be better off if it renounces competitive prices at the domestic level- the use of trade barriers:the marginal util- will prevail,it does suggest that unilateral ity to it of an increase in the income of an restrictions on the use of an optimum ally may be greater than the marginal tariff can be in the strictly economic self- utility to it of a smaller increase in its own interest of a far-sighted,clear-thinking income.Thus,all members of an alliance hegemon-whether within or outside an may be better off if the great power or alliance. powers pursue free trade,just as the utili- Because the limit pricing analogue sug- ty of two individuals may be enhanced by gests that it may be cheaper to forgo an a transfer of income from one to the other optimum tariff than standard trade theory (Boadway and Wildasin 1984,116).That implies,it also suggests that the incidence this is plausible in the context of intra- of decisions to do so for political reasons alliance trade is suggested by the efficien- and the incidence of intraalliance altruism cy losses associated with the use of tariffs may be higher than would otherwise be (Caves and Jones 1973,244)and by the expected.Experimental results indicate, large welfare improvements that typically for example,that the frequency of altruis- accrue to small states as a consequence of tic behavior is inversely related to its cost trade. (Frohlich et al.1984,23).Thus,in its own Intraalliance altruism is more likely to self-interest,a great power may choose to be supplied within the coalitions of bi- forgo the use of an optimum tariff against polar systems than within the coalitions its smaller allies. of multipolar ones.Both the threat of exit and the hope that another great power Constraints on exploitation.A great member of the alliance will act altruisti- power's ability to exercise its monopoly cally make it improbable that interdepen- power depends not only on its economic dent utility functions will motivate "effec- incentives to do so but also on the con- tive"altruism (i.e.,an actual change in straints others can impose on it.In a behavior [Becker 1981,173])in a multi- variety of contexts (Levi 1983,1988; polar world.Exit creates the risk that in- Popkin 1986),constraints on the ability of come forgone will redound to the advan- the more-powerful to exploit the less- tage of another alliance.Vulnerability to powerful are attributed to the dependence free riding threatens the expression of of the"rulers"on the welfare of those they altruism,because any great power is bet- rule and to the existence of competition ter off if another acts to advance the col- or of "rivals to rule"(North 1981). lective welfare of the alliance than if it Analogous constraints limit the exploi- does so itself;thus,as is true of coalition tation of the small by the large within alli- maintenance,each state may pursue its ances.The dependence of each great national rather than alliance interests power on the welfare of its allies gives (Collard1978,13). each an incentive to define its self-interest The competitive constraint on exploita- altruistically,where altruism means sim- tion,however,might appear to be strong- 1252American Political Science Review Vol. 83 to lower global barriers to trade after the war. In short, because an attempt to exploit its power in the short run may undermine that power over time, a nonmyopic, ra￾tional hegemon may reject an optimum tariff. Although the limit pricing argu￾ment does not support an inference that free trade-the international analogue of competitive prices at the domestic level￾will prevail, it does suggest that unilateral restrictions on the use of an optimum tariff can be in the strictly economic self￾interest of a far-sighted, clear-thinking hegemon-whether within or outside an alliance. Because the limit pricing analogue sug￾gests that it may be cheaper to forgo an optimum tariff than standard trade theory implies, it also suggests that the incidence of decisions to do so for political reasons and the incidence of intraalliance altruism may be higher than would otherwise be expected. Experimental results indicate, for example, that the frequency of altruis￾tic behavior is inversely related to its cost (Frohlich et al. 1984,23). Thus, in its own self-interest, a great power may choose to forgo the use of an optimum tariff against its smaller allies. Constraints on exploitation. A great power's ability to exercise its monopoly power depends not only on its economic incentives to do so but also on the con￾straints others can impose on it. In a variety of contexts (Levi 1983, 1988; Popkin 1986), constraints on the ability of the more-powerful to exploit the less￾powerful are attributed to the dependence of the "rulers" on the welfare of those they rule and to the existence of competition or of "rivals to rule" (North 1981). Analogous constraints limit the exploi￾tation of the small by the large within alli￾ances. The dependence of each great power on the welfare of its allies gives each an incentive to define its self-interest altruistically, where altruism means sim￾ply that its "utility function depends posi￾tively on the well-being" of its allies (Becker 1981,173). Thus, the great power derives less utility from intraalliance in￾come transfers than from other interna￾tional income transfers (see Conybeare 1987, 88). Indeed, each great power in an alliance may actually be better off if it renounces the use of trade barriers: the marginal util￾ity to it of an increase in the income of an ally may be greater than the marginal utility to it of a smaller increase in its own income. Thus, all members of an alliance may be better off if the great power or powers pursue free trade, just as the utili￾ty of two individuals may be enhanced by a transfer of income from one to the other (Boadway and Wildasin 1984, 116). That this is plausible in the context of intra￾alliance trade is suggested by the efficien￾cy losses associated with the use of tariffs (Caves and Jones 1973, 244) and by the large welfare improvements that typically accrue to small states as a consequence of trade. Intraalliance altruism is more likely to be supplied within the coalitions of bi￾polar systems than within the coalitions of multipolar ones. Both the threat of exit and the hope that another great power member of the alliance will act altruisti￾cally make it improbable that interdepen￾dent utility functions will motivate "effec￾tive" altruism (i.e., an actual change in behavior [Becker 1981, 1731) in a multi￾polar world. Exit creates the risk that in￾come forgone will redound to the advan￾tage of another alliance. Vulnerability to free riding threatens the expression of altruism, because any great power is bet￾ter off if another acts to advance the col￾lective welfare of the alliance than if it does so itself; thus, as is true of coalition maintenance, each state may pursue its national rather than alliance interests (Collard 1978, 13). The competitive constraint on exploita￾tion, however, might appear to be strong-