Macchiavello, Rocco and Morjariay, Ameet (2013) The value of relationships : evidence from a supply shock to Kenyan rose exports. Working Paper. Coventry, UK: University of Warwick, Department of Economics. Warwick economics research papers series (TWERPS), Volume 2013 (Number 1032).

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Abstract

This paper provides evidence on the importance of reputation, intended as beliefs buyers hold about seller's reliability, in the context of the Kenyan rose export sector. A model of reputation and relational contracting is developed and tested. We show that 1) the value of the relationship increases with the age of the relationship; 2) during an exogenous negative supply shock sellers prioritize relationships consistently with the predictions of the model; and 3) reliability at the time of the shock positively correlates with future survival and relationship
value. Models exclusively focussing on enforcement or insurance considerations cannot account for the evidence.

Item Type:	Working or Discussion Paper (Working Paper)
Subjects:	H Social Sciences > HB Economic Theory
Divisions:	Faculty of Social Sciences > Economics
Library of Congress Subject Headings (LCSH):	Flowers -- Marketing , Exports -- Kenya, Economics -- Mathematical models
Series Name:	Warwick economics research papers series (TWERPS)
Publisher:	University of Warwick, Department of Economics
Place of Publication:	Coventry, UK
Official Date:	June 2013
Volume:	Volume 2013
Number:	Number 1032
Number of Pages:	47
Status:	Not Peer Reviewed
Publication Status:	Published
Access rights to Published version:	Open Access
URI:	http://wrap.warwick.ac.uk/id/eprint/59370

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