Relationships on the Rocks: Contract Evolution in a Market for Ice

• 成果类型: Article
• 署名作者: Ghani, Tarek; Reed, Tristan
• 署名单位: Washington University (WUSTL); The World Bank
• 刊物名称: AMERICAN ECONOMIC JOURNAL-MICROECONOMICS
• ISSN/ISSBN: 1945-7669
• DOI: 10.1257/mic.20190166
• 发表日期: 2022
• 页码: 330-365
• 关键词: trade credit; COMPETITION; price; institutions; entry; WAR

摘要

Firms use relational contracts to support repeated trade. Do these informal agreements evolve in response to market conditions? In a market for ice, firms reestablish relationships on new terms when a prior agreement breaks down. Using transaction data, we show that ice retailers prioritize deliveries to loyal buyers-fishing firms when supply from the monopolistic manufacturer is scarce. After an upstream shock to competition increases supply, repeated trade lapses, threatening retailers' positions. Incumbent retailers establish a new agreement expanding trade credit to loyal buyers, which impedes new retailer entry. Upstream competition also increases downstream firms' productivity and lowers consumer fish prices.