Decentralizing Cooperation through Upstream Bilateral Agreements

Doh-Shin Jeon and Yassine Lefouili

No 14974, CEPR Discussion Papers from C.E.P.R. Discussion Papers

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.

Keywords: Bilateral oligopoly; Upstream agreements; Cooperation (search for similar items in EconPapers)
JEL-codes: L13 L41 (search for similar items in EconPapers)
Date: 2020-06
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Working Paper: Decentralizing Cooperation through Upstream Bilateral Agreements (2020)
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