As the global order shifts from U.S.-led multilateralism toward fragmented geopolitics and deglobalization, regionalism has reemerged as a strategic response to uncertainty and rivalry, especially for small and medium-sized states (SMSs) seeking to manage external pressure while preserving autonomy. This paper develops a game-theoretical framework to explain how SMSs exercise institutional agency under asymmetric power conditions, with a focus on ASEAN. Departing from conventional liberal institutionalist assumptions, the model conceptualizes regional integration as a sequential bargaining game between regional great powers (RGPs), external great powers (EGPs), and SMSs acting as agenda-setters.

Using an extensive game with perfect information, the model captures inter- and intra-regional bargaining dynamics, strategic choices, and integration outcomes under conditions of geopolitical rivalry and economic fragmentation. It identifies the strategic conditions under which SMS-led regionalism emerges as an equilibrium outcome, despite conflicting preferences between RGPs and EGPs. The study demonstrates how ASEAN increases its bargaining leverage through issue linkage, agenda sequencing, and norm diffusion, enabling it to shape regional frameworks rather than merely absorb external influence.

Empirically, the paper examines the Regional Comprehensive Economic Partnership (RCEP) and ASEAN Plus Three (APT), showing how ASEAN strategically orchestrated cooperation during heightened geopolitical rivalry and economic fragmentation. The findings reveal that in a deglobalizing environment, SMSs can reconstruct regionalism in ways that mitigate power asymmetries, sustain cooperation, and enhance institutional resilience. This research contributes to broader debates on regionalism, institutional design, and strategic behavior in a multipolar world.