Collective action problems derive from interactions among actors pursuing the same goal to generate so-called collective goods such as collective defense. Yet, each actor involved faces simultaneously a high incentive to shirk on his own contribution to the common cause because he will benefit anyway if others produce these desired collective goods. In NATO European allies have been criticized for “free riding” on American collective goods production for a long time. This raises the question why NATO does not crumble from these irreconcilable conflicts. After all it consists of highly heterogenous member states.
This article answers this puzzle by demonstrating that NATO build up and adjusted many different institutions to address and ameliorate a wide range of collective action problems. These institutional adjustments and innovations therefore provide a very persuasive explanation why NATO still persists despite substantial collective action challenges.
This rather abstract explanation is illustrated by analyzing several illuminating examples such as burden sharing, NATO’s defense planning system, procedures to generate and activate national forces for NATO operations, and decisions for the first use of nuclear weapons.