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A concession agreement refers to a negotiated contract allowing a company to conduct business under specific conditions. There are two main interpretations of this term in the business realm. First, it describes a contract between a foreign company and a government, permitting the company to operate within that country's borders, often with incentives like tax reductions or relaxed regulations. Second, it refers to agreements granting a company exclusive rights to operate in a specific area in exchange for negotiated terms. When negotiating such agreements, companies may need to make concessions if the government is less favorable toward their proposals.
