A central challenge facing any great power is choosing whether to punish or cooperate with states that are emerging powers and thus potential challengers. Complexity only increases as competition for finite domestic resources raises debates over their allocation between the twin demands of productive capacity and military security. The Challenge of Hegemony examines the role of international forces to explain domestic institutional changes and the effect of these changes on a hegemon's foreign economic and security policies.

Steven E. Lobell argues that the commercial policy of the rising states will alter the balance of political power among competing domestic coalitions in the hegemon. The strengthened coalition will use these gains to advance a foreign policy strategy that bolsters its political position. The weakened coalition will resist such policies--even if this undermines the state's economic or military interest. Lobell concludes his book with policy implications for the United States in the coming decades.