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Exclusive contracts foster relationship-specific investment
, 2004
"... Exclusive contracts prohibit one or both parties from trading with anyone else. Contrary to earlier findings, notably Segal and Whinston (2000), we show that investments that are specific to the contracted parties may be encouraged. Results depend on the nature of the investments and whether the bar ..."
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Cited by 7 (1 self)
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Exclusive contracts prohibit one or both parties from trading with anyone else. Contrary to earlier findings, notably Segal and Whinston (2000), we show that investments that are specific to the contracted parties may be encouraged. Results depend on the nature of the investments and whether
Trade Credit, Product Market Power, and Relationship-specific Investment
, 2009
"... We propose a strategic role for trade credit (TC) in a context that requires upstream firms to make relationship specific investments (RSI). Using a simple model, we argue that trade credit will be demanded by downstream firms when contracts are incomplete and RSI is difficult to observe. The benefi ..."
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We propose a strategic role for trade credit (TC) in a context that requires upstream firms to make relationship specific investments (RSI). Using a simple model, we argue that trade credit will be demanded by downstream firms when contracts are incomplete and RSI is difficult to observe
Keiretsu and Relationship-Specific Investment: Implications for MarketOpening Trade Policy
, 1999
"... This paper develops a model of informal procurement within Japanese keiretsu so as to consider effects on intermediate-good imports, such as auto parts. Parts-suppliers make relationship-specific investments that benefit the auto-maker and prices are determined by bargaining after investment has bee ..."
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Cited by 19 (6 self)
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This paper develops a model of informal procurement within Japanese keiretsu so as to consider effects on intermediate-good imports, such as auto parts. Parts-suppliers make relationship-specific investments that benefit the auto-maker and prices are determined by bargaining after investment has
Trade Credit, Relationship-specific Investment, and Product-market Power
, 2010
"... The existing literature emphasizes the financing role of trade credit (TC) i.e., the notion that financially sound firms use TC to ease the credit constraints faced by weaker trading partners. We offer an alternative, but not mutually exclusive, perspective on TC serving as a commitment device. We d ..."
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Cited by 1 (0 self)
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develop a simple model in a setting with incomplete contracts and show that TC emerges as a guarantee that induces appropriate levels of relationship-specific investments (RSI) by the upstream firm. The model predicts that the TC provided by firms increases in (i) the level of their RSI, (ii
Title Keiretsu and relationship-specific investment: Implications formarket-opening trade policy
"... Implications for market-opening trade policy by ..."
Does Relationship-Specific Investment Depend on Asset Ownership? Evidence from a Natural Experiment in the Housing
- Market”, Journal of the European Economic Association
, 2013
"... Real world contracts are simple- but are they incomplete? Are con-tracts restricted by transactions costs to rely on residual control rights al-though a complex mechanism would implement a more efficient allocation? Only if the answer is yes, the incomplete contracting approach is justified. I study ..."
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Cited by 3 (0 self)
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study empirically the classic application of the incomplete contracting approach: the hold-up problem. I compare the frequency of relationship specific investments, such as kitchen or bath renovations, in owner occu-pied and rental housing. Using the variation in home ownership induced by natural
unknown title
"... Keiretsu and relationship-specific investment: Implications for market-opening trade policy by ..."
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Keiretsu and relationship-specific investment: Implications for market-opening trade policy by
Relationship-specificity, Incomplete Contracts, and the Pattern of Trade
- JOURNAL OF ECONOMICS
, 2007
"... Is a country’s ability to enforce contracts an important determinant of comparative advantage? To answer this question, I construct a variable that measures, for each good, the proportion of its intermediate inputs that require rela-tionship-specific investments. Combining this measure with data on ..."
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Cited by 264 (3 self)
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on trade flows and judicial quality, I find that countries with good contract enforcement specialize in the production of goods for which relationship-specific investments are most important. According to my estimates contract enforcement explains more of the pattern of trade than physical capital
Investment in Relationship-Specific Assets: Does Finance Matter?
, 2010
"... An influential strand of literature starting with the Nobel Prize winning work of Oliver Williamson (1971, 1975) argues that a rational agent underinvests in relationship-specific assets due to the possibility of an opportunistic behaviour on the part of her contractual partner. We …rst combine the ..."
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the insights from this literature with the theoretical work on financial intermediaries and argue that a strong banking sector can alleviate this well-known holdup problem and stimulate relationship-specific investment. Then we empirically confirm this prediction by showing that industries dependent
unknown title
"... www.elsevier.com/locate/econbase Keiretsu and relationship-specific investment: implications for market-opening trade policy a b, ..."
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www.elsevier.com/locate/econbase Keiretsu and relationship-specific investment: implications for market-opening trade policy a b,
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