Abstract

How does competition affect market outcomes when formal contracts are not enforceable and parties resort to relational contracts? Difficulties with measuring relational contracts and dealing with the endogeneity of competition have frustrated attempts to answer this question. We make progress by studying relational contracts between upstream farmers and downstream mills in Rwanda’s coffee industry. First, we identify salient dimensions of their relational contracts and measure them through an original survey of mills and farmers. Second, we take advantage of an engineering model for the optimal placement of mills to construct an instrument that isolates geographically determined variation in competition. Conditional on the suitability for mills’ placement in the catchment area, we find that mills surrounded by more suitable areas (i) face more competition from other mills, (ii) use fewer relational contracts with farmers, and (iii) exhibit worse performance. An additional competing mill also (iv) reduces the aggregate quantity of coffee supplied to mills by farmers and (v) makes farmers worse off. Competition hampers relational contracts directly by increasing farmers’ temptation to default on the relational contract and indirectly by reducing mills’ profits.

中文翻译：

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卢旺达咖啡链中的竞争和关系合同*

摘要

当正式合同不可执行且当事方诉诸关系合同时，竞争如何影响市场结果？衡量关系合同和处理竞争的内生性的困难使试图回答这个问题的努力受挫。我们通过研究卢旺达咖啡行业上游农民与下游工厂之间的关系合同来取得进展。首先，我们确定其关系合同的显着维度，并通过对工厂和农民的原始调查对其进行度量。其次，我们利用工程模型来优化工厂的布局，以构建一种工具，该工具可以隔离地理上确定的竞争差异。以工厂是否适合在集水区放置为条件，我们发现，周围地区更合适的工厂（i）与其他工​​厂相比面临更多的竞争，（ii）与农民的关系合同较少，并且（iii）绩效较差。另一个竞争工厂也（iv）减少了农民向工厂提供的咖啡总量，并且（v）使农民的生活更加恶化。竞争直接通过增加农民对关系合同违约的诱惑来阻碍关系合同，而间接地通过减少工厂的利润来阻碍关系合同。