Competition and Trust: Evidence from German Car Manufacturers

Leonardo Felli, Johannes Koenen () and Konrad O. Stahl

No 3358, CESifo Working Paper Series from CESifo

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

Keywords: trust; hold-up problem; competition; specific investment; suppliers; car manufacturers; German automotive industry (search for similar items in EconPapers)
JEL-codes: D22 D86 L22 L62 (search for similar items in EconPapers)
Date: 2011
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (4)

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Related works:
Working Paper: Competition and Trust: Evidence from German Car Manufacturers (2011)
Working Paper: Competition and Trust: Evidence from German Car Manufacturers (2011)
Working Paper: Competition and trust: Evidence from German car manufacturers (2011)
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Persistent link: https://EconPapers.repec.org/RePEc:ces:ceswps:_3358

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