Decentralizing Cooperation through Upstream Bilateral Agreements

Doh-Shin Jeon and Yassine Lefouili
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Doh-Shin Jeon: TSE-R - Toulouse School of Economics - UT Capitole - Université Toulouse Capitole - Comue de Toulouse - Communauté d'universités et établissements de Toulouse - EHESS - École des hautes études en sciences sociales - CNRS - Centre National de la Recherche Scientifique - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement

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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 agreement; Cooperation (search for similar items in EconPapers)
Date: 2025-09-30
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Working Paper: Decentralizing Cooperation through Upstream Bilateral Agreements (2020)
Working Paper: Decentralizing Cooperation through Upstream Bilateral Agreements (2020)
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