Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/108775
Authors: 
Calzolari, Giacomo
Felli, Leonardo
Koenen, Johannes
Spagnolo, Giancarlo
Stahl, Konrad O.
Year of Publication: 
2015
Series/Report no.: 
CESifo Working Paper 5229
Abstract: 
We develop a simple theoretical model of a long term buyer-supplier relationship with non-contractible buyer specific R&D investment, and derive predictions on the effects of trust and competition on suppliers' investment and buyers' procurement strategies. We address these issues empirically using unique survey data on individual buyer-supplier relationships in the German automotive industry. Consistent with the model's predictions, higher levels of trust are associated with higher investment levels - but also with more competitive procurement: trust and rents from reduced supplier competition in the procurement process emerge as substitutes both in theory and in the data.
Subjects: 
trust
hold-up problem
competition
innovation
specific investment
procurement
relational contracts
management practices
suppliers
car manufacturers
German automotive industry
JEL: 
D86
D22
L22
L62
Document Type: 
Working Paper

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