coordination failures. Different types of efficiency arise when buyers undertake investment before market competition. These … inefficiencies lead to buyers' under-investment due to a hold-up problem but, when competition is at its peak, there is a unique …

, we show that more trust in a relationship is associated with higher idiosyncratic investment by suppliers and better part … unsophisticated technology, and disappear for parts involving sophisticated technology. We rationalize all these observations by means … relationships involving higher trust, buyers are able to induce higher investment and more intense competition among suppliers - but …

&D investment, and derive predictions on the effects of trust and competition on suppliers' investment and buyers' procurement … automotive industry. Consistent with the model's predictions, higher levels of trust are associated with higher investment levels …

; competition ; specific investment ; suppliers ; car manufacturers ; German automotive industry …