We study the directed last-passage percolation model on the planar square lattice with nearest-neighbor steps and general i.i.d. weights on the vertices, outside of the class of exactly solvable models. Stationary cocycles are constructed for this percolation model from queueing fixed points. These cocycles serve as boundary conditions for stationary last-passage percolation, solve variational formulas that characterize limit shapes, and yield existence of Busemann functions in directions where the shape has some regularity. In a sequel to this paper the cocycles will be used to prove results about semi-infinite geodesics and the competition interface.
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