• intercountry adoption;
  • orphans;
  • children

Critics of intercountry adoption define it as a demand-driven market for babies, from which parents in rich countries benefit at the expense of those in poor countries. Advocates hold that it often provides the best chance for orphaned children to grow up in a family. This paper investigates these opposing claims. It develops a theory that outlines the circumstances under which intercountry adoption is likely to result in a “baby trade,” and evaluates expectations derived from that theory on the basis of data on adoptions to the United States. The findings suggest that sending countries with large and fast-growing adoption programs may be particularly vulnerable to the temptation to supply a demand-driven market. However, sending countries do not simply respond to international incentives. Instead, the variation in participation in intercountry adoption between sending countries is partially driven by domestic incentives. The paper ends with suggestions for future research and policy.