Capacity gains from transmitter and receiver cooperation are compared in a relay network where the cooperating nodes are close together. Under quasi-static phase fading, when all nodes have equal average transmit power along with full channel state information (CSI), it is shown that transmitter cooperation outperforms receiver cooperation, whereas the opposite is true when power is optimally allocated among the cooperating nodes but only CSI at the receiver (CSIR) is available. When the nodes

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... ave equal power with CSIR only, cooperative schemes are shown to offer no capacity improvement over non-cooperation under the same network power constraint. When the system is under optimal power allocation with full CSI, the decode-and-forward transmitter cooperation rate is close to its cut-set capacity upper bound, and outperforms compress-and-forward receiver cooperation. Under fast Rayleigh fading in the high SNR regime, similar conclusions follow. Cooperative systems provide resilience to fading in channel magnitudes; however, capacity becomes more sensitive to power allocation, and the cooperating nodes need to be closer together for the decode-and-forward scheme to be capacity-achieving. Moreover, to realize capacity improvement, full CSI is necessary in transmitter cooperation, while in receiver cooperation optimal power allocation is essential.