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Tilburg Law and Economics Center

TILEC supports and stimulates academic research on the governance of economic activity. It fosters academically path breaking and practically relevant research and aims to be a leading center worldwide.

TILEC Seminar: Konrad Stahl (U Mannheim)

Relational Contracts, Competition and Innovation: Theory and Evidence from German Car Manufacturers
10:45-11:45, M 1003

Prof. Dr. Konrad O. Stahl is Professor Emeritus of Economics at the University of Mannheim, and a CEPR Research Fellow. He has been a research associate in the ZEW Department of Industrial Economics and International Management (recently rename to Department of Economics of Innovation and Industrial Dynamics) for more than 20 years. His research focuses on industrial organization and regional economics. He has published numerous articles, amongst them on R&D and its effects on industrial structure. He has been involved in leading positions in many Germany- and EU-wide research projects.


Using unique data from buyer-supplier relationships in the German automotive industry, we unveil a puzzle by which more trust in a relationship is associated with higher idiosyncratic investment, but also more competition. We develop a theoretical model of repeated procurement with non-contractible, buyer-specific investments rationalizing both observations. Against the idea that competition erodes rents needed to build trust and sustain relationships, we infer that trust and competition tend to go hand in hand. In our setting trust and rents from reduced supplier competition behave like substitutes, rather than complements as typically understood.

Click here for the paper

When: 17 January 2018 10:45

End date: 17 January 2018 11:45

Where: Tias building