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SUMMARY:CHEAP TRADE CREDIT AND COMPETITION IN DOWNSTREAM MARKETS - Emanuel
 e Tarantino\, Assistant Professor\, University of Mannheim
DTSTART:20181107T130000Z
DTEND:20181107T140000Z
UID:TALK113179@talks.cam.ac.uk
CONTACT:Emily Brown
DESCRIPTION:Using a unique dataset with information on 20 million inter-fi
 rm transactions\, we provide evidence that suppliers offer trade credit to
  high-bargaining-power customers to ease competition in downstream markets
  in which they have a large number of other clients.\n\nDifferently from p
 rice discounts\, trade credit targets infra-marginal units and does not lo
 wer the marginal cost of high-bargaining-power customers. As a consequence
 \, the latter do not gain market share and the supplier can preserve profi
 table sales to low-bargaining-power customers.\n\nWe show that empirically
  trade credit is not monotonically increasing in past purchases\, as is co
 nsistent with our conjecture that it targets infra-marginal units. In addi
 tion\, the supplier grants trade credit to high bargaining-power-customers
  only when it fears the cannibalization of sales to other low-bargaining-p
 ower clients.\n\nOur results are not driven by differences in suppliers’
  ability to provide trade credit\, customer-specific shocks\, or endogenou
 s location decisions.
LOCATION:Fadi Boustany Lecture Theatre\, Cambridge Judge Business School
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