States create international institutions in attempts to resolve problems they cannot solve alone. Yet states vary in their desire to form and join such institutions and in their incentives to defect from those they do join. These obstacles to cooperation have produced considerable variation in the mechanisms institutions use to deter defection without deterring participation. Some rely on narrow issue-specific reciprocity, whereas others rely on broader linkages involving coercive sanctions or positive rewards. This diversity in institutional scope is neither meaningless variation nor simple experimentation. Instead, states tend to base institutions on issue-specific reciprocity when possible but incorporate positive or negative linkage to other issue-areas when the distribution and enforcement problems within an issue-area appear more severe.

In an interdependent world one state's behavior often imposes unintended costs on other states. Yet, though all such negative externalities create demands for their resolution, all externalities are not alike. Some are symmetric, with all states being simultaneously victims and perpetrators. Others are asymmetric, with “downstream” states being victims of, or dissatisfied with, the externality and “upstream” states being perpetrators of it. Dissatisfied states may accept both types of externalities, or they may try to resolve them by force. But they often create international institutions to resolve them.

In symmetric externalities the fact that all states prefer mutual cooperation to the status quo predisposes states toward narrow institutions that rely on issue-specific reciprocity. Although coercion or side payments could also be used to combat incentives to defect, such linkage is usually unnecessary.