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This paper investigates the formation of production and trading networks in economies with general interdependencies and complex property rights. We argue that the right to exclude, a core tenet of property, grants asset owners local monopoly power that is amplified by an economy's endogenous production network. Our analysis generalizes the exclusion core, a cooperative solution concept based on the right to exclude, to markets with production. We identify sufficient (and essentially necessary) conditions for the nonemptiness of the exclusion core. Multisourcing and a bias toward shorter supply chains emerge in exclusion‐core outcomes. As a methodological contribution, we generalize the top trading cycles algorithm to a production economy and we show that it identifies outcomes in an economy's exclusion core. [ABSTRACT FROM AUTHOR]

Several structural results for the set of competitive equilibria in trading networks with frictions are established: The lattice theorem, the rural hospitals theorem, the existence of side‐optimal equilibria, and a group‐incentive‐compatibility result hold with imperfectly transferable utility and in the presence of frictions. While our results are developed in a trading network model, they also imply analogous (and new) results for exchange economies with combinatorial demand and for two‐sided matching markets with transfers. [ABSTRACT FROM AUTHOR]

Diversifying supply chains has been a policy objective of the Japanese government to construct a robust and resilient economy since the spread of COVID‐19 in the final stages of the Abe Administration. Although geographically expanded supply chains incur a risk of inflows of negative economic shocks from other regions and countries, this risk can be alleviated by more diversification. In addition, diversified supply chains are found to promote the performance of firms. Recently, the domestic supply chains of Japanese firms started to be diversified, but firms still agglomerate in Tokyo substantially. Moreover, the international supply chains of Japanese firms rely considerably on Chinese suppliers and clients. Therefore, more geographic diversification of supply chains of Japanese firms is suggested for the more robust, resilient, and high‐growth economy in the post Abenomics period, including diversifying within Japan, reducing the reliance on China, and strengthening links with developed countries, with the help of the government. [ABSTRACT FROM AUTHOR]

We investigate how information goods are priced and diffused over links in a network. A new equivalence relation between nodes captures the effects of network architecture and locations of sellers on the division of profits, and characterizes the topology of competing (and potentially overlapping) diffusion paths. Sellers indirectly appropriate profits over intermediation chains from buyers in their equivalence classes. Links within the same class constitute bottlenecks for information diffusion and confer monopoly power. Links that bridge distinct classes are redundant for diffusion and generate competition among sellers. In dense networks, competition limits the scope of indirect appropriability and intellectual property rights foster innovation. [ABSTRACT FROM AUTHOR]

This paper proposes a game of weighted network formation in which each agent has a limited resource to form links of possibly different intensities with other agents and to use for private purposes. We show that every equilibrium is either "reciprocal" or "nonreciprocal." In a reciprocal equilibrium, any two agents invest equally in the link between them. In a nonreciprocal equilibrium, agents are partitioned into "concentrated" and "diversified" agents, and a concentrated agent is only linked to diversified agents and vice versa. For every link, the concentrated agent invests more in the link than the diversified agent. The unweighted relationship graph of an equilibrium, in which two agents are linked if they both invest positively in each other, uniquely predicts the equilibrium values of each agent's network investment and utility level, as well as the ratio of any two agents' investments in each other. We show that equilibria are not pairwise stable and are not efficient due to the positive externalities of investing in a link. [ABSTRACT FROM AUTHOR]

In a general model of trading networks with bilateral contracts, we propose a suitably adapted chain stability concept that plays the same role as pairwise stability in two‐sided settings. We show that chain stability is equivalent to stability if all agents' preferences are jointly fully substitutable and satisfy the Laws of Aggregate Supply and Demand. In the special case of trading networks with transferable utility, an outcome is consistent with competitive equilibrium if and only if it is chain stable. [ABSTRACT FROM AUTHOR]

To quantify contracting distortions in a real‐world market, we develop and structurally estimate a model of contracting under payoff uncertainty in the south Indian groundwater economy. Uncertainty arises from unpredictable fluctuations in groundwater supply during the agricultural dry season. Our model highlights the tradeoff between the ex post inefficiency of long‐term contracts and the ex ante inefficiency of spot contracts. We use unique data on both payoff uncertainty and relationship‐specific investment collected from a large sample of well‐owners in Andhra Pradesh to estimate the model's parameters. Our estimates imply that spot contracts entail a 3% efficiency loss due to hold‐up. Counterfactual simulations also reveal that the equilibrium contracting distortion reduces the overall gains from trade by about 4% and the seasonal income of the median borewell owner by 2%, with proportionally greater costs borne by smaller landowners. [ABSTRACT FROM AUTHOR]

This paper endogenizes the number of firms in an industry with positive network effects, complete incompatibility, and firms that compete in quantity. To this end, we compare two possibilities: free entry and second‐best number of firms (the one that maximizes social welfare). We show that with business‐stealing competition, free entry yields, in general, more firms than the socially optimal solution. In addition, we find that by the nature of the industry with firm‐specific networks, total production may be greater or lower under free entry than with a regulator; moreover, some industries attain their maximum social welfare with a monopoly. [ABSTRACT FROM AUTHOR]

Public‒private partnerships (PPPs) are often promoted as a means to lower the costs and increase the quality and value for money (VfM) of public construction and infrastructure projects. While the increasing capital stock of PPPs warrants evaluation of their performance there has until now been limited systematic assessment of PPP versus conventional public procurement. This article contributes to the literature by presenting the findings of a systematic review of empirical peer‐reviewed studies comparing the costs, quality, and/or VfM of infrastructure PPP projects with conventional public procurement. The international literature suggests that PPPs are on average more costly and provide approximately similar VfM as conventional procurement. The number of empirical evaluations is limited, however, and evidence on the quality of infrastructure facilities is particularly scarce. While infrastructure PPPs continue to proliferate, systematic assessment of their performance is warranted to assist policy‐makers in choosing the procurement method that offers best value for taxpayers, users and society. [ABSTRACT FROM AUTHOR]

Public managers are under increasing pressure to develop and operate physical infrastructure systems that prove resilient in the face of natural disasters. At the same time, fiscal pressures and mounting infrastructure needs are drawing more and more attention to public–private partnerships (PPP) as a mechanism for delivering infrastructure. The research question guiding this study is how can the institutional designs of PPPs influence the potential for improving infrastructure resilience? We examined the perceived relationship between infrastructure resilience and PPPs by conducting and analyzing research interviews with twenty‐four senior infrastructure experts in Washington, DC. The results reflect findings of related privatization research, indicating that market‐based incentives can advance public values such as resilience, but the responsibility for ensuring they do so rests primarily with government. We note key differences in how the infrastructure investment experts and disaster resilience experts view issues in infrastructure management, and provide suggestions for improving public‐private collaboration to improve resilience. [ABSTRACT FROM AUTHOR]

An important emerging problem in soybean marketing is the variability in quality, which is typically measured by protein and ultimately results in mispricing. This study analyzes the effects of testing soybeans for specific quality traits including essential amino acids. A model was developed to analyze costs and risks that may arise for grain handlers to segregate soybeans into high‐ and low‐quality grain flows based on alternative importer purchasing specifications. A stochastic optimization model is used to determine optimal testing locations and intensities in addition to the costs and risks to grain handlers. The model allows for blending to determine optimal shipments from separate locations with differing quality distributions. This paper provides a framework for agribusinesses, grain handlers, and marketers to make decisions in response to importers' purchasing requirements and strategies. [ABSTRACT FROM AUTHOR]

We characterize systematic differences in willingness and opportunity to contract for farmers in and out of the French bean supply market in Kenya. We find that the factors associated with being a low cost producer do not always align with the factors correlated with opportunity to contract. We also find that farmers in and out of the market differ on average in the premiums they place on buyer reliability, which suggests that imperfect contract enforcement could impact participation in French bean contracting. [ABSTRACT FROM AUTHOR]

This paper studies market clearing in matching markets. The model is non‐cooperative, fully decentralized, and in Markov strategies. Workers and firms bargain with each other to determine who will be matched with whom and at what terms of trade. Once a worker–firm pair reaches agreement, they exit the market. Alternative possible matches affect agents' bargaining positions. We ask under which conditions such markets clear efficiently and find that inefficiencies—mismatch and delay—feature frequently. Mismatch occurs whenever an agent's bargaining position is at risk of deteriorating. Delay occurs whenever agents expect their bargaining position to improve. Delay can be extensive and structured with vertically differentiated markets endogenously clearing from the top down. [ABSTRACT FROM AUTHOR]

The aim of this paper is to provide quantitative information about the position of the UK in the network of global value chains (GVCs) and to discuss its implications for the UK's post‐Brexit trade policy. We find that the UK has become much less integrated into global production networks than other EU countries over the period 2000–14, and is almost unique among EU countries in that the domestic content of its exports increased over this period. This reflects the relatively high and growing domestic service content in UK exports. As a result of this, reducing the UK's tariffs on imported goods is unlikely to have a large direct effect on the average export competitiveness of UK firms. Potentially more significant for the UK is how future trade barriers with the EU are likely to affect its participation in cross‐country value chains that meet final demand in markets in North America and East Asia. Such indirect exports are not captured in conventional trade statistics and can only be analysed using a GVC approach. Our findings suggest that the UK will benefit only to a limited extent from bilateral trade agreements with countries outside the EU (a 'Global Britain' strategy) if it gives up its role in the supply chains that service these countries via the EU hub. [ABSTRACT FROM AUTHOR]

Zipf's law is one of the best known empirical regularities in urban economics. There is extensive research on the subject, where each city is treated symmetrically in terms of the cost of transactions with other cities. Recent developments in network theory facilitate the examination of an asymmetric transport network. In a scale‐free network, the chance of observing extremes in network connections becomes higher than the Gaussian distribution predicts and, therefore, it explains the emergence of large clusters. The city‐size distribution shares the same pattern. This paper decodes how accessibility of a city to other cities on the transportation network can boost its local economy and explains the city‐size distribution as a result of its underlying transportation network structure. We confirm our model predictions with US and Belgian data. Finally, we discuss the endogenous evolution of transport networks. [ABSTRACT FROM AUTHOR]

We study both theoretically and empirically the relationship between different types of corporate social responsibility (CSR) and a firm's product quality. On the one hand, observable external CSR (e.g., a firm's involvement in a social project) can be used as a signal to unobservable product quality. On the other hand, internal CSR (e.g., human resources practices such as training and labor stability) can improve a firm's labor productivity, specially in firms supplying high quality. We show that CSR may serve as a tool for a firm's product differentiation strategy, finding that both internal and external CSR enhance a firm's product quality. Moreover, this implies the existence of complementarity between internal and external CSR (they mutually reinforce each other) through product quality. We test our theoretical results with data from the hotel industry where we show that hotel establishments with a higher product quality are indeed more likely to be socially responsible, both internally and externally, indicative of the existence of complementarity. [ABSTRACT FROM AUTHOR]

I explore the estimation of transferable utility matching games, encompassing many‐to‐many matching, marriage, and matching with trading networks (trades). Computational issues are paramount. I introduce a matching maximum score estimator that does not suffer from a computational curse of dimensionality in the number of agents in a matching market. I apply the estimator to data on the car parts supplied by automotive suppliers to estimate the valuations from different portfolios of parts to suppliers and automotive assemblers. [ABSTRACT FROM AUTHOR]

ABSTRACT: Public–private partnerships (PPPs) are long‐term contractual agreements between the public and private sector for the provision of public infrastructures and services. Due to tighter budget constraints and to a renewed interest in greater involvement of the private sector in the provision of public services, PPPs are likely to grow in the near future. In this paper, we review the theory and practice of PPPs, highlighting their potential role as well as discussing the main factors influencing the likelihood of performance failure. [ABSTRACT FROM AUTHOR]

During the past two decades, food assistance policy has shifted toward local or regional food purchases and away from purchases from donor countries. Although most local and regional procurement occurs through hard tendering processes open to large-scale firms and farms, there is growing interest in identifying how and whether to procure from smallholder farmer organizations (FOs). To date, little is known about the drivers of successful contracting with FOs. We utilize data from the United Nations World Food Programme Purchase for Progress pilot in three East African countries to predict defaults on contracts. We examine four possible explanations: country contexts, FO characteristics, prior experience with contracts, and contract modalities and their relationship to local spot market prices. The single most important predictor of default is the increase in market prices between contract approval and delivery. Yet, although increases in market prices are linked to increases in default, this relationship is decreasing in contract size, indicating search costs associated with breaking contracts. Our findings yield both generalizable and context-specific insights about whether-and when-procuring from smallholder farmers can be successfully integrated into the food assistance toolkit. [ABSTRACT FROM AUTHOR]

ABSTRACT This note considers the competing vertical structures framework with Cournot-Bertrand competition downstream. It shows that the equilibrium wholesale price paid by a Cournot (Bertrand)-type retailer is above (below) marginal costs of a corresponding manufacturer. This result contrasts with the one under pure competition downstream (i.e., Cournot or Bertrand), where the wholesale price is set below (above) marginal costs in case of a Cournot (Bertrand) game at the retail level. [ABSTRACT FROM AUTHOR]

Using an original dataset from the Vietnamese catfish sector, I analyze the impact of vertical coordination options, namely, contract farming and vertical integration, on farm performance, which is measured in terms of yields and revenue per hectare. The effects of vertical coordination are estimated using a maximum simulated likelihood estimator and a two-stage least square regression with instrumental variables to account for endogenous farm and household characteristics and selection on unobservable characteristics. The results show that vertically integrated farms have substantially higher yields and revenue per hectare than nonintegrated farms. The levels of gains that can be attributed to integration are large and consistent under different estimation procedures, and there is no difference between nonintegrated and contract farms in terms of farm performance. [ABSTRACT FROM AUTHOR]

ABSTRACT Across many sectors, the locus of innovation has shifted from the individual firm to networks of collaboration. Networking is one way for small- and medium-sized enterprises (SMEs) in the food sector to cope with the many challenges they face with regards to innovation. In this article, we investigate the influence of different types of networking on the innovation capacity of chain networks in the traditional food sector. Our results highlight that networking among the vertical network members contributes most to the enhancement of the innovation capacity of all members. We also find that, horizontal or third-party networking can enhance the innovation capacity of each member of a vertical network. Managerial implications include a prescription for network engagement through a set of joint activities and effort. [ABSTRACT FROM AUTHOR]

This article examines the interlocking directorates' structure of prominent Argentine business groups at the end of the import substitution period (1970-72), identifying corporate relations among and between business groups and the largest companies, during a period characterised by high institutional and macroeconomic instability. Applying social network analysis, it seeks to clarify how business groups can contribute to the cohesion of a corporate network structure, through their ability to create links among firms not only within their boundaries but also external to them. The article contributes to both corporate network and business groups' literature, highlighting a role of business groups that extant literature has failed to identify as relevant. [ABSTRACT FROM AUTHOR]

The British rail network was privatised in the mid- to late 1990s. However, the sector was heavily regulated and not permitted to evolve according to market processes. Indeed, the government imposed a complex and fragmented structure on the industry which ran counter to traditional railway practices. As a consequence, economies of scale and scope were lost, while transaction costs were increased. There was a negative impact on costs and safety. Given the disappointing outcomes, there is a strong case for reforming the sector by facilitating the development of a privately owned and vertically integrated rail system. [ABSTRACT FROM AUTHOR]

Last but not least, Todo and Inoue's literature review and accompanying discussion focus on the effects on supply chains of supply shocks such as natural disasters. Keywords: L14; F68; D85 EN L14 F68 D85 325 326 2 07/21/21 20210701 NES 210701 The worldwide COVID-19 outbreak has impacted on the domestic and international supply chains of Japanese firms. Against this kind of turning-inward policy argument, Todo and Inoue emphasize the potential benefits from supplier substitutability and international knowledge diffusion through geographically diversified supply chains, which is quite meaningful. [Extracted from the article]

Todo and Inoue (2021) provide a review of the empirical evidence of how supply chain participation and diversification affect firms when they experience such shocks (directly or indirectly). Keywords: L14; F68; D85 EN L14 F68 D85 323 324 2 07/21/21 20210701 NES 210701 Supply chains have evolved into ever more complex networks of buyers and sellers over time. The lessons drawn from the literature make sense - reducing the degree of supply chain concentration - whether through increasing substitutability and diversification - can improve the robustness and resilience of supply chain firms. [Extracted from the article]

The Hunter Valley, New South Wales, is both Australia's oldest continually producing wine region and a highly functioning wine business cluster. New generation cluster actors perceive that the region's concentration of historic family-based firms has contributed to its strength. We have used rarely consulted and newly accessioned evidence from the 1820s to the 1920s to qualitatively test the extent to which early networking created pathways for knowledge flow in the region. Our cross-disciplinary research into the historic depth of embedded cooperation reveals a little known feature of early Australian business history and complements the more commonplace breadth approach in cluster studies. [ABSTRACT FROM AUTHOR]

Foreign direct investment (FDI) can benefit domestic firms in the host country. Using firm-level data for China, we find statistically positive vertical spillover effects of multinational enterprises on the performance of domestic firms through backward and forward supplier-customer relationships. The spillover effects are mainly from large multinational enterprises and are greater for state-owned firms and in poor regions. Our results are robust for both parametric regression and nonparametric matching techniques. Our findings have strong policy implications: while regulations relating to building business relationships with domestic firms when seeking foreign direct investment should be established, such policies should be aimed at private firms, big multinationals and less developed regions. [ABSTRACT FROM AUTHOR]

We examine incidents in which Japanese businesses are implicated in corporate scandals. Such firms suffer statistically significant losses in their market values. Given the negligible legal and regulatory penalties for Japanese companies, we interpret the results as convincing evidence on the magnitude of reputational losses. We also compare our results to those found in US studies. The average negative abnormal stock price reaction is larger in Japan than in the USA. Moreover, they are negative and statistically significant even when it is not obvious that the firm violated an implicit or explicit contract with the damaged party. [ABSTRACT FROM AUTHOR]

The introduction of competition has frequently been found to cause costs to fall. There has, however, been a question as to whether this was partly achieved at the cost of quality. Auction theory predicts prices would fall more the greater the competition to provide the service. There has been some debate about whether the smaller budgets would make contract compliance more difficult. Evidence is found in support of this hypothesis. We also find some evidence that the better recorded performance of the in-house direct service organisations (DSOs) during this period was due to the information advantage they had from being incumbents. [ABSTRACT FROM AUTHOR]

We examine the relation between mutual fund performance and gross flows for a large sample of actively managed U.S. mutual funds. Unlike previous studies that have only examined periods of generally increasing net flows, our sample includes periods of both increasing and decreasing net flows. We find that outflows are related to performance, with investors withdrawing money from poor performers. We also find that outflows and inflows respond asymmetrically to performance, outflows increase more aggressively following poor performance, and inflows increase more aggressively following good performance. Additionally, we find a symmetric performance net flow relation. [ABSTRACT FROM AUTHOR]

We consider a vertically differentiated market in which consumers' utility is assumed to depend on the price, congestion level and the stand-alone quality of the good or service. Two firms compete on this market, choosing capacities, stand-alone qualities and prices. We characterize completely the subgame perfect equilibrium for the homogenous market case (where only one firm is active without congestion). We prove that both firms are active, choosing minimal differentiation along the capacity and quality dimensions. Therefore, the presence of congestion rules out market preemption as a possible outcome in equilibrium and weakens the incentive to differentiate. [ABSTRACT FROM AUTHOR]

A theoretical model is developed to illustrate the economic incentives to invest in quality in markets with a dual reputation structure: private (firm reputation) and collective (regional reputation). Numerical dynamic programming techniques are then used to simulate firms' strategic behaviour, and competitive outcomes are compared to the optimal investment of a regional planner. Market and product characteristics inducing asymmetric and/or sub-optimal investment strategies, potentially destabilising for the region, are investigated. [ABSTRACT FROM AUTHOR]

A wide range of empirical studies show the extent to which the rise of supermarkets in developing countries transforms domestic marketing channels. In many countries, the exclusion of small producers from so-called dynamic marketing channels (that is, remunerative ones) has become a concern. Based on data collected in Turkey in 2007 at the producer and the wholesale market levels, we show that intermediaries are important to understanding the impact of downstream restructuring (supermarkets) on upstream decisions (producers). Results show first that producers are not aware of the final buyer of their produce, because intermediaries hinder the visibility of the marketing channel, thereby restricting a producer's choice to that of the first intermediary. Econometric results show that producers who are indirectly linked to the supermarkets are more sensitive to their requirements in terms of quality and packaging than to the price premia compensating the effort made to meet standards. Therefore, the results lead us to question the role of the wholesale market agents who act as a buffer in the chain and protect small producers from negative shocks, but who stop positive shocks as well, and thereby reduce incentives. [ABSTRACT FROM AUTHOR]

Theoretical models on group lending assume the formation of groups of homogenous risk types. Recent theoretical and empirical findings challenge this view arguing that when markets for insurance are missing, risk homogeneity may not hold any more and risk heterogeneity can be the optimal outcome. Using data from an MFI in Tigray (Ethiopia), this article examines the homogeneity hypothesis and reflects on implications for repayment. No evidence is found that supports risk homogeneity, even accounting for matching frictions. However, we also do not find an explicit link between the presence of risk heterogeneity and side-payments due to missing insurance as suggested in the literature. Instead, other trust-based social networks seem to underlie heterogeneity. Such social networks are often synchronized with credit groups and influence the probability of repayment under heterogeneity. The implication is that successful repayment rates in group lending need not arise only under risk homogeneity but can also arise under risk heterogeneity. Heterogeneity may also serve to bridge missing insurance markets in poor rural environments. MFIs therefore need to consider such local conditions when designing their lending schemes. [ABSTRACT FROM AUTHOR]

The question of which factors are relevant in determining bond underwriting fees is empirically investigated by analysing 2,202 bond issues completed by European firms during the 1993 – 2003 period. Four major results emerge from the analysis. First, the introduction of the single currency in 1999 has generated an increase in competition among banks, and, as a result, a reduction in underwriting fees. Second, a strong relationship with the issuer's main bank reduces the level of underwriting fees. Third, new issuers are charged with lower underwriter fees relative to firms that have completed issues without building any strong relationship with a bank. Fourth, higher reputation banks charge lower underwriting fees. The implications of these findings are also discussed. [ABSTRACT FROM AUTHOR]

In several food-producing sectors, we observe vertical integration between the farming and processing stages. The salmon industry, which has motivated this paper, has seen a rise in large vertically integrated companies over the last decade, with direct ownership of production activities including hatcheries, fish processing and exporting. Both the farming and processing stages have become more capital intensive, which has led to a steeper U-shaped average cost (AC) curve. In this paper we present a theoretical link between this technological shift and vertical integration: in a repeated game model of relational contracting, we show that when the AC curve is sufficiently steep, then processors and farmers are more likely to vertically integrate. The reason is that steep AC curves make it costly to deviate from the optimal production scale, which in turn makes processors more vulnerable to hold-up and opportunistic behaviours from its suppliers. [ABSTRACT FROM AUTHOR]

The establishment of New Zealand's press agency, the New Zealand Press Association (NZPA), as a co-operative news gathering agency in 1880 has traditionally been regarded as reflecting a pioneering spirit of newspaper unity or as being largely determined by the political situation of the time. But these explanations are insufficient. Applying economic and organisational theories of co-operatives to the history of NZPA, this paper reveals it was market conditions that led to the creation of NZPA as a co-operative news gathering service. Following profound changes in those market conditions, NZPA recently abandoned this co-operative news gathering model. [ABSTRACT FROM AUTHOR]

Asset specificity is usually considered to be an argument for vertical integration. The main idea is that specificity induces opportunistic behavior, and that vertical integration reduces the cost of preventing opportunism. In this paper I show that asset specificity can be an argument for non-integration. In a repeated-game model of self-enforcing relational contracts, it is shown that when parties are non-integrated, increasing degrees of asset specificity make it possible to design relational contracts with higher-powered incentives. [ABSTRACT FROM AUTHOR]

Food and agricultural commodity value chains in developing and transition countries have undergone tremendous changes in the past decades. Companies and property rights have been privatized, markets liberalized, and economies integrated into global food systems. The liberalization and privatization initially caused the collapse of state-controlled vertical coordination. More recently, private vertical coordination systems have emerged and are growing rapidly as a response to consumer demand for food quality and safety on the one hand and the farms' production constraints caused by factor market imperfections. In this article we (1) demonstrate the importance of these changes, (2) discuss the implications for efficiency and equity, and (3) provide empirical evidence on the effects in several developing and transition countries. [ABSTRACT FROM AUTHOR]

Diagnostic tests provide valuable information to buyers about credence attributes such as food safety and GMO content. Errors in testing, however, can mislead buyers and lead to problems such as adverse selection. The ability to segregate suppliers who can deliver safe food from suppliers who cannot depends on the accuracy of the test procedure. In this article we examine the effect of test sensitivity, specificity, and sampling error on the ability to segregate safe and unsafe suppliers. We find that there is a maximum level of error below which unsafe suppliers are deterred from accepting a utility maximizing buyer's bid price. The maximum error depends on the probability that a supplier's production is unsafe and the cost of producing an unsafe lot, among other things. Understanding this relationship makes it possible to design contracts and government regulations that discourage unsafe suppliers from trading. [ABSTRACT FROM AUTHOR]

Abstract: We develop a model focusing on the dynamic aspect of syndication, namely, the know-how transfer between syndication partners and their ability to learn. The core of the analysis checks whether reputational concerns outweigh the temptation to renege on a given contract. Throughout the paper, we investigate two key topics. The first consists of the conditions under which investors syndicate their deals. The second focuses on who chooses whom. Sometimes, the syndication is impeded because the financier believes that his partner has strong incentives to either renege on a contract (hold-up problem) or to shirk (moral hazard problem). [Copyright &y& Elsevier]

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