Public Good Agreements under the Weakest-link Technology

We analyze the formation of public good agreements under the weakest-link technology. Cooperation on migration policies, money laundering measures and biodiversity conservation e§orts are prime examples of this technology. Whereas for symmetric players, policy coordination is not necessary, for asymmetric players cooperation matters 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, a very 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 stability of agreements and associate gains from cooperation. We compare our results with those obtained under the well-known summation technology and demonstrate that they can be derived under much more general conditions.