The Value of Relationships: Evidence from a Supply Shock to Kenyan Rose Exports

Rocco Macchiavello and Ameet Morjaria

American Economic Review, 2015, vol. 105, issue 9, 2911-45

Abstract: This paper provides evidence on the importance of reputation in the context of the Kenyan rose export sector. A model of reputation and relational contracting is developed and tested. A seller's reputation is defined by buyer's beliefs about seller's reliability. We show that (i) due to lack of enforcement, the volume of trade is constrained by the value of the relationship; (ii) the value of the relationship increases with the age of the relationship; and (iii) during an exogenous negative supply shock deliveries are an inverted-U shaped function of relationship's age. Models exclusively focusing on enforcement or insurance considerations cannot account for the evidence. (JEL D86, F14, L14, O13, O19, Q17)

JEL-codes: D86 F14 L14 O13 O19 Q17 (search for similar items in EconPapers)
Date: 2015
Note: DOI: 10.1257/aer.20120141
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Citations: View citations in EconPapers (190)

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Related works:
Working Paper: The value of relationships: evidence from a supply shock to Kenyan rose exports (2015)
Working Paper: The Value of Relationships: Evidence from a Supply Shock to Kenyan Rose Exports (2013)
Working Paper: The Value of Relationships: Evidence from a Supply Shock to Kenyan Rose Exports (2013)
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