Citation

Long-Term Contracts and Repeated Interaction: Evidence from the Costa Rican Coffee Market

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Abstract:

We use contract-level data from the Costa Rican coffee industry to explore the relationship between formal and relational contracts. We hypothesize that long-term contracts may be more effective and more attractive on balance (given that they do come with costs of inflexibility) when employed between frequently contracting parties who can use the power of relational contracting to improve the enforceability of the long-term formal contract. The empirical analysis demonstrates that in fact more frequently contracting firms are more likely to employ long-term contracts than are infrequently contracting firms; this is especially so for differentiated beans.
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0 (1),

Author's Keywords:

contracts, vertical arrangements, buyer-supplier relationships
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Association:
Name: BALAS
URL:
http://http://www.balas.org/


Citation:
URL: http://citation.allacademic.com/meta/p1346216_index.html
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MLA Citation:

Corts, Kenneth. and Martínez, Octavio. "Long-Term Contracts and Repeated Interaction: Evidence from the Costa Rican Coffee Market" Paper presented at the annual meeting of the BALAS, University of San Diego, San Diego, USA, Mar 21, 2018 <Not Available>. 2018-10-15 <http://citation.allacademic.com/meta/p1346216_index.html>

APA Citation:

Corts, K. S. and Martínez, O. , 2018-03-21 "Long-Term Contracts and Repeated Interaction: Evidence from the Costa Rican Coffee Market" Paper presented at the annual meeting of the BALAS, University of San Diego, San Diego, USA Online <APPLICATION/PDF>. 2018-10-15 from http://citation.allacademic.com/meta/p1346216_index.html

Publication Type: Conference Paper/Unpublished Manuscript
Review Method: Peer Reviewed
Abstract: We use contract-level data from the Costa Rican coffee industry to explore the relationship between formal and relational contracts. We hypothesize that long-term contracts may be more effective and more attractive on balance (given that they do come with costs of inflexibility) when employed between frequently contracting parties who can use the power of relational contracting to improve the enforceability of the long-term formal contract. The empirical analysis demonstrates that in fact more frequently contracting firms are more likely to employ long-term contracts than are infrequently contracting firms; this is especially so for differentiated beans.


 
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