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Decentralizing Cooperation through Upstream Bilateral Agreements

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  • Jeon, Doh-Shin
  • Lefouili, Yassine

Abstract

We consider an industry with n≥3 firms owning upstream inputs and interacting noncooperatively in a downstream market. Under general conditions, upstream bilateral agreements giving firms access to one another's input lead to industry profit maximization. This decentralization result applies to various upstream agreements including cross-licensing agreements among patent-holding manufacturers, interconnection agreements among telecommunication companies, interbank payments for ATM networks, and data-sharing agreements among competitors or complementors.

Suggested Citation

  • Jeon, Doh-Shin & Lefouili, Yassine, 2020. "Decentralizing Cooperation through Upstream Bilateral Agreements," TSE Working Papers 20-1119, Toulouse School of Economics (TSE).
    • Handle: RePEc:tse:wpaper:124410
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    References listed on IDEAS

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    JEL classification:

    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets
    • L41 - Industrial Organization - - Antitrust Issues and Policies - - - Monopolization; Horizontal Anticompetitive Practices

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