Currently we have only to choose between a douche and a turd. It would be nice to at least get different shades of douche and turd to pick, and who knows, we may get to pick something that isn't horrible.
In most of Europe, PR systems tend to avoid permanent coalition.
In Denmark, often we form minority governments (that is a government formed from fewer mandates than half the parliament), but usually with a 'support party'. This support party is sometimes ignored, because they are likely too fringe to have the actual government, and thus reaching across the aisle is necessary.
If it's get my party with it's 4 seats on board or fail and hold new elections, I can make demands way in excess of what those 4 seats should get me, right? And then once the government's installed, why not just hold them hostage again?
I mean, assuming your parliamentarians have no sense of shame. Maybe that's my bias from watching American legislators.
The only problem is that if the government cannot find an agreement across the aisle, they have to go to their fringe support party. So the opposition always have to wager this when negotiating. If they don't want to find an agreement with the government, the result might be worse than a compromise. So it is an advantage to the government in negotiating positions sometimes.
If the coalition's large parties have alternative small parties to choose from, the smallest party has to compete for entrance with the other smallest parties.
This 'reverse auction' makes it possible that a small party would end up with net 0 power when the right to govern is taken into account (could be itself negative).
An agreement that excludes a new election from being called should be possible at this point (e.g. Conservative-Liberal Democrat coalition agreement).
The fact that we normally observe smallest members having outsized power might be explained by, e.g.: 1) Coalition in a two/three-party Westminster-style system tends to mean the third party is essential and doesn't have competition 2) Regression to the mean: we would observe this anyway if power in coalition was independent of party size.
Normally, the smaller parties take the blame for the decisions of the larger one, which is a facet of irish politics which I have never been able to understand.
That could be fixed by a preferential system similar to what's in Australia (if the first pick is <5%, take the second, ... repeat until all votes are accounted for in a party that's actually present).
The current power dynamics are in favor of large parties (people voting for the a "safe" party that is the closest to them, instead of risking to lose their vote), so it's unlikely to change.