Abstract
The design of defence alliances such as NATO has been criticised for failing adequately to provide a public good. However, in the presence of both market failure and governmental failure such a design may appear less objectionable. It is possible to show, for example, that the adjustment mechanism in a mutual assistance alliance helps reduce the excesses that result from bureaucratic inefficiency. In this way the appropriate design of supranational structures may prove as important as constitutional constraints when it comes to restraining those distortions which have been identified by the public choice school.

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