Complementarity in alliances: How strategic compatibility and hierarchy promote efficient cooperation in international security

Abstract How can defense alliances reap the efficiency gains of working together when coordination and opportunism costs are high? Although specializing as part of a collective comes with economic and functional benefits, states must bargain over the distribution of those gains and ensure the costs of collective action are minimized. I argue that states can overcome these problems by forming alliances with high strategic compatibility and hierarchy. This approach minimizes opportunism and coordination costs by efficiently distributing defense capabilities, encouraging complementarity rather than redundancy. I demonstrate this by developing a novel network‐level measure of division of labor and applying it to data on national military capabilities from 1970 to 2014. This research not only enhances understanding of the modern international system but also underscores the importance of these considerations for intra‐alliance bargaining more broadly.