Main Argument: Bargaining is a central feature of federal relations; the principal challenge of federal design is the need to “institutionalize” bargaining so that relevant decision makers, competing in pursuit of their self-interest, do so in such a way as to minimize the extent to which conflict over outcomes infects the choice of rules under which bargaining and outcome selection occurs. Federations and the institutions that describe them arise in precisely those circumstances in which the mutual self-interest of the member states does not provide a sufficient guarantee that their coalition will survive without additional aids.
Method: Some light game theory about cycling of preferences with historical examples.
== Notes ==
Public goods are commonly characterized by:
a) “publicness of consumption”
b) “privateness of production”
– Federal design consists of rules legitimately subject to renegotiation (a part of Level 1), rules that constrain the state and any such renegotiation (Level 2), and rules (Level 3) that, by the very motives they establish, keep themselves as well as those at the constitutional levels in place