Public Good Agreements under the Weakest-link Technology

We analyze the formation of public good agreements under the weakest-link technol-ogy. Cooperation on migration policies, money laundering measures and biodiversityconservation e§orts are prime examples of this technology. Whereas for symmetricplayers, policy coordination is not necessary, for asymmetric players cooperation mat-ters but fails, in the absence of transfers. In contrast, with an optimal transfer scheme,asymmetry may not be an obstacle but an asset for cooperation. Counterintuitively, avery skewed distribution of interests may allow even the grand coalition being stable.We characterize various types and degrees of asymmetry and relate them to the stabil-ity of agreements and associate gains from cooperation. We compare our results withthose obtained under the well-known summation technology and demonstrate that theycan be derived under much more general conditions.