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Title:Competition and trust: Evidence from German car manufacturers PDF Logo
Authors:Felli, Leonardo
Koenen, Johannes
Stahl, Konrad O.
Issue Date:2011
Series/Report no.:ZEW Discussion Papers 11-072
Abstract:We explore the determinants and effects of trust relationships between upstream suppliers and downstream producers. Using unique survey data on individual supplier-buyer relationships in the German automotive industry, we show, by means of different measures of supplier-buyer trust, that higher levels of trust mitigate relationship-specific underinvestment in a classical hold-up situation. Moreover, contrary to the extant literature, we show that higher levels of supplier's trust are reflected in the buyer's choice of a more competitive procurement strategy among potential suppliers.
Subjects:trust
hold-up problem
competition
specific investment
suppliers
car manufacturers
German automotive industry
JEL:D86
D22
L22
L62
Document Type:Working Paper
Appears in Collections:Publikationen von Forscherinnen und Forschern des ZEW
ZEW Discussion Papers

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