Competition and Trust: Evidence from German Car Manufacturers
AbstractWe 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.
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Bibliographic InfoPaper provided by C.E.P.R. Discussion Papers in its series CEPR Discussion Papers with number 8265.
Date of creation: Feb 2011
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Other versions of this item:
- Felli, Leonardo & Koenen, Johannes & Stahl, Konrad O., 2011. "Competition and Trust: Evidence from German Car Manufacturers," Discussion Paper Series of SFB/TR 15 Governance and the Efficiency of Economic Systems 349, Free University of Berlin, Humboldt University of Berlin, University of Bonn, University of Mannheim, University of Munich.
- Leonardo Felli & Johannes Koenen & Konrad O. Stahl, 2011. "Competition and Trust: Evidence from German Car Manufacturers," CESifo Working Paper Series 3358, CESifo Group Munich.
- Felli, Leonardo & Koenen, Johannes & Stahl, Konrad O., 2011. "Competition and trust: Evidence from German car manufacturers," ZEW Discussion Papers 11-072, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research.
- D22 - Microeconomics - - Production and Organizations - - - Firm Behavior: Empirical Analysis
- D86 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Economics of Contract Law
- L22 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Organization and Market Structure
- L62 - Industrial Organization - - Industry Studies: Manufacturing - - - Automobiles; Other Transportation Equipment
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