Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/46503
Authors: 
Felli, Leonardo
Koenen, Johannes
Stahl, Konrad O.
Year of Publication: 
2011
Series/Report no.: 
CESifo working paper: Industrial Organisation 3358
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

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