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In this paper, we investigate performance of cooperative diversity techniques for inter-vehicular communication. The channel model used in this system is cascaded Rayleigh which provides a realistic description of inter-vehicular channel where two or more independent Rayleigh processes are assumed to be generated by independent groups of scatterers around the two mobile terminals. In this paper, we investigate the performance of amplify-and-forward relaying for an inter-vehicular cooperative scheme assisted by a road-side access point which acts as a relay. Our diversity analysis shows that the cooperative scheme is able to extract the full distributed spatial diversity. We further formulate a power allocation problem for the considered scheme to optimize the power allocated to considered system. Performance gains up to nearly 3 dB are observed through optimum power allocation depending on the relay location.