Wallerstein's world-system approach is applied to an empirical analysis of the international economy of tobacco with special reference to the US as its core and Zimbabwe as one of its most important peripheral countries. Exchange between the two types of countries is mediated through an interorganizational network of local farms and both multinational trading and manufacturing enterprises. Transactions between the three types of organizations are predominantly governed by market mechanisms. Adequate explanation of that vertical sequence of organizations and markets requires significant modifications and improvements of Wallerstein's key notions and basic hypotheses. Arguments from transaction cost theory are introduced to achieve a better micro-foundation of world-systems analysis.