States experiencing negative externalities caused by other states' behaviors have incentives to devise international institutions to change those behaviors. The institutions states create to counter incentives to defect vary in whether and how they expand institutional scope to accomplish that goal. When facing symmetric externalities, states tend to devise narrow institutions based on issue-specific reciprocity. When facing asymmetric externalities, or upstream/downstream problems, states tend to broaden institutional scope using linkage strategies. When victims of an externality are stronger than its perpetrators, the resulting institutions, if any are devised, are likely to incorporate the negative linkage of sanctions or coercion. When victims are weaker, exchange institutions relying on the positive linkage of rewards are more likely. We illustrate the influence of situation structure on institutional design with three cases: international whaling, ozone-layer depletion, and Rhine River pollution.
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