16 March 2026We analyze the existence, coordination and efficiency effects of group-level cooperation in games featuring heterogeneous strategic spillovers and externalities within and between groups of agents. Conclusions depend on whether out-group interactions feature strategic substitutes or complements. Under high out-group strategic spillovers, group-level cooperation triggers either equilibrium existence or coordination issues. When these effects are not too high, a unique group-level cooperation equilibrium exists and its characterization depends on the in-group externality level. With respect to efficiency, cases are characterized under which this initiative is self-enforcing. Conditions are also provided under which it backfires: the cooperating group members would be actually better off if they could ex-ante commit to not cooperate, even if it would be costly to do so.