We study how informal buyer-supplier relationships in the German automotive industry affect procurement. Using unique data from a survey focusing on these, we show that more trust, the belief that the trading partner acts to maintain the mutual relationship, is associated with both higher...

This paper investigates the issue of strategic delegation by considering the role of management centrality in contracting with different stakeholders. Specifically, a sequential negotiation unionized duopoly model is analysed, in which the management relative bargaining power visà-vis...

We analyze the listing decisions of a retailer who may ask her suppliers to make upfront payments in order to be listed. We consider a sequential game with upfront payments being negotiated before short-term delivery contracts. We show that the retailer is more likely to use upfront payments the...

This paper studies optimal relational contracts when the value of the relationship between contracting parties is not commonly known. I consider a principal-agent setting where the principal has persistent private information about her outside option. I show that if the principal has the...

This article analyzes a simple two period model where two homogenous manufacturers compete to supply a monopolist retailer. We show that if manufacturers are vulnerable (i.e if they are likely to exit the market in case of insufficient orders in the first period) they may exploit their threat of...

This paper studies the effect bargaining power has on self-enforcing contracts. Optimal contracts are characterized under three enforcement regimes. When enforcement is absent, I show that as the agent's bargaining power increases, her incentive payments decrease even though her total...

This study quantifies bargaining power in supply-side negotiations with incomplete information, where car dealers negotiate inventory prices with large sellers at wholesale used-car auctions. We measure an agent's bargaining power in an incomplete-information setting as the fraction of the...

We investigate the role of mutual trust in long-term vertical relationships involving trades of complex goods. High complexity is associated with high contract incompleteness and hence the increased relevance of trust-based relational contracts. Contrary to expectations, we find that changes in...

This article analyzes a simple two-period model where two homogenous manufacturers compete to supply a monopolist retailer. We show that if manufacturers are vulnerable (i.e if they are likely to exit the market in case of insufficient orders in the first period), they may exploit their threat...

We analyze the optimal procurement of labor, which can be supplied either internally, based on wage negotiations, or acquired at terms negotiated with an external subcontractor. The novel feature of our model is that the subcontractor's bargaining power is a function of the proportion of output...