Discussion Paper Details

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Title: Decentralizing Cooperation through Upstream Bilateral Agreements

Author(s): Doh-Shin Jeon and Yassine Lefouili

Publication Date: June 2020

Keyword(s): Bilateral oligopoly, Cooperation and upstream agreements

Programme Area(s): Industrial Organization

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.

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Bibliographic Reference

Jeon, D and Lefouili, Y. 2020. 'Decentralizing Cooperation through Upstream Bilateral Agreements'. London, Centre for Economic Policy Research.