Cooperative communication provides distributed spatial diversity that enables energy-efficient transmission from source nodes to destination ones via intermediate relay nodes. Moreover, it is an attractive solution for network coverage extension. Communicating nodes could generally work in half duplex and full duplex modes. In full-duplex mode, the simultaneous transmission and reception are performed on the same frequency. Thus communication suffers from a significant level of loop interference, i.e., signal leakage between transmission and reception at the relay node. Until now, different methods are proposed to cancel loop-back interference in point to point communication system. However applying these methods could not completely cancel loop-back interference. Furthermore, channel estimation error causes more decreasing effects on the system performance. In this dissertation, we aim to study the performance of fundamental important full-duplex structures of the cooperative networks in the presence of both loop-back interference and channel estimation errors and try to improve the performance of these systems analytically. For this purpose, we apply the loop-back interference model to the systems, then derive the outage probability and the capacity upper bound in Rayleigh fading channels for one-way relaying and capacity lower bound for two-way relaying structures, respectively. Then, we improve the performance of the system using optimum power allocation. Channel estimation error makes the analysis complicated and we are looking for suitable simplifying approximations to find simple solutions for the power allocation. The proposed power allocation schemes do not depend on the instantaneous channel information and can be used in practice. We investigate the accuracy of the analysis by Monte-Carlo simulations. In the scenarios of our simulations, we compare full-duplex and half-duplex transmission modes in two-hop communication systems with the optimum power allocation. It has been shown that the full-duplex performance is better than the half-duplex one, if the average power transmission is less than specific threshold. This threshold increases as the loop-back interference power decreases. Also, in two-way communication, it is better to use full-duplex analog network coding method for low transmission power and half-duplex one for high power rather than to use traditional routing method. Keywords: Cooperativenetworks,Full-duplex communication,Loop-back interference,Optimal power allocation