Abstract: Cooperative communication for wireless networks has gained a lot of recent interest due to its ability to mitigate fading with exploration of spatial diversity. In this paper, we study a joint optimization problem of jointly considering transmission mode selection, relay assignment and power allocation to maximize the capacity of the network through cooperative wireless communications. This problem is much more challenging than relay assignment considered in literature work which simply targets to maximize the transmission capacity for a single transmission pair. We formulate the problem as a variation of the maximum weight matching problem where the weight is a function over power values which must meet power constraints (VMWMC). Although VMWMC is a non-convex problem whose complexity increases exponentially with the number of relay nodes, we show that the duality gap of VMWMC is virtual zero. Based on this result, we propose a solution using Lagrange dual decomposition to reduce the computation complexity. We do simulations to evaluate the performance of the proposed solution. The results show that our solution can achieve maximum network capacity with much less computation time compared with exhaustive search, and our solution outperforms existing sub-optimal solutions that can only achieve much lower network capacity.