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-buyertrust, tha thigher 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 supplierâ€™s trust are reflected in the buyerâ€™s choice of a more competitive procurement strategy among potential suppliers.
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Bibliographic InfoPaper provided by Free University of Berlin, Humboldt University of Berlin, University of Bonn, University of Mannheim, University of Munich in its series Discussion Paper Series of SFB/TR 15 Governance and the Efficiency of Economic Systems with number 349.
Date of creation: Feb 2011
Date of revision:
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Trust; Hold-up problem; Competition; Speci?c investment; Suppliers; Car manufacturers; German automotive industry;
Other versions of this item:
- Felli, Leonardo & Koenen, Johannes & Stahl, Konrad O, 2011. "Competition and Trust: Evidence from German Car Manufacturers," CEPR Discussion Papers 8265, C.E.P.R. Discussion Papers.
- 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.
- Leonardo Felli & Johannes Koenen & Konrad O. Stahl, 2011. "Competition and Trust: Evidence from German Car Manufacturers," CESifo Working Paper Series 3358, CESifo Group Munich.
- D86 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Economics of Contract Law
- D22 - Microeconomics - - Production and Organizations - - - Firm Behavior: Empirical Analysis
- L22 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Organization and Market Structure
- L62 - Industrial Organization - - Industry Studies: Manufacturing - - - Automobiles; Other Transportation Equipment
This paper has been announced in the following NEP Reports:
- NEP-ALL-2011-02-19 (All new papers)
- NEP-BEC-2011-02-19 (Business Economics)
- NEP-CIS-2011-02-19 (Confederation of Independent States)
- NEP-COM-2011-02-19 (Industrial Competition)
- NEP-EUR-2011-02-19 (Microeconomic European Issues)
- NEP-IND-2011-02-19 (Industrial Organization)
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