First, we extend Leifer-Milner RPO theory, by giving general conditions to obtain IPO labelled transition systems (and bisimilarities) with a reduced set of transitions, and possibly finitely branching. Moreover, we study the weak variant of Leifer-Milner theory, by giving general conditions under which the weak bisimilarity is a congruence. Then, we apply such extended RPO technique to the lambda-calculus, endowed with lazy and call by value reduction strategies.
We show that, contrary to process calculi, one can deal directly with the lambda-calculus syntax and apply Leifer-Milner technique to a category of contexts, provided that we work in the framework of weak bisimilarities.
However, even in the case of the transition system with minimal contexts, the resulting bisimilarity is infinitely branching, due to the fact that, in standard context categories, parametric rules such as the beta-rule can be represented only by infinitely many ground rules.
To overcome this problem, we introduce the general notion of second-order context category. We show that, by carrying out the RPO construction in this setting, the lazy observational equivalence can be captured as a weak bisimilarity equivalence on a finitely branching transition system. This result is achieved by considering an encoding of lambda-calculus in Combinatory Logic.

Comment: 35 pages, published in Logical Methods in Computer Science

• 03B40 - Combinatory logic and lambda calculus
• 18A30 - Limits and colimits (products, sums, directed limits, pushouts, fiber products, equalizers, kernels, ends and coends, etc.)
• 68Q85 - Models and methods for concurrent and distributed computing (process algebras, bisimulation, transition nets, etc.)