Document de travail

Decentralizing Cooperation through Upstream Bilateral Agreements

Doh-Shin Jeon et Yassine Lefouili


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.


Bilateral oligopoly; upstream agreement; cooperation;

Codes JEL

  • L13: Oligopoly and Other Imperfect Markets
  • L41: Monopolization • Horizontal Anticompetitive Practices


Doh-Shin Jeon et Yassine Lefouili, « Decentralizing Cooperation through Upstream Bilateral Agreements », TSE Working Paper, n° 20-1119, juin 2020.

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Publié dans

TSE Working Paper, n° 20-1119, juin 2020