The value of relationships: evidence from a supply shock to Kenyan rose exports

Rocco Macchiavello and Ameet Morjaria

LSE Research Online Documents on Economics from London School of Economics and Political Science, LSE Library

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-codes: D86 F14 L14 O13 O19 Q17 (search for similar items in EconPapers)
Date: 2015-09
New Economics Papers: this item is included in nep-int
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Citations: View citations in EconPapers (179)

Published in American Economic Review, September, 2015, 105(9), pp. 2911-2945. ISSN: 0002-8282

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Related works:
Journal Article: 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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