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The performance in the downlink of a reuse 1:1 cellular wireless system is severely degraded due to the interference originating from adjacent cell sites. Even the spectral efficiency gains due to MIMO vanish for cell-edge users who are interference limited. Cooperative MIMO, which involves coordination amongst base stations serving adjacent cell-sites, is a promising technique to address the co-channel interference problem. In this paper, we study cooperation in the downlink of an interference channel. The basestations cooperate amongst themselves to arrive separately at precoding strategies which improve the signal-to-interference-and-noise ratio of the cell-edge users and hence the throughput. We propose a distributed algorithm that independently determines the precoder which mitigates the interference to the neighboring cell edge users without compromising on the in-cell performance. This algorithm requires only modest levels of on-air-feedback and information exchange among the basestations on the backhaul networks.