Cheap trade credit and competition in downstream markets


Giannetti, Mariassunta ; Serrano-Velarde, Nicolas ; Tarantino, Emanuele



DOI: https://doi.org/10.2139/ssrn.3070979
URL: https://www.researchgate.net/publication/321379578...
Additional URL: https://papers.ssrn.com/sol3/papers.cfm?abstract_i...
Document Type: Working paper
Year of publication: 2017
The title of a journal, publication series: Swedish House of Finance research paper
Volume: 17-20
Place of publication: Stockholm
Publication language: English
Institution: School of Law and Economics > VWL, Mikroökonomik (Juniorprofessur) (Tarantino 2014-)
Subject: 330 Economics
Classification: JEL: G3 , D2 , L1,
Keywords (English): Trade credit , competition , input prices , supply chains
Abstract: Using a unique matched dataset of customers and suppliers, 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 customers. Differently from price discounts, trade credit can target infra-marginal units and does not lower the marginal cost of the high-bargaining-power customers. In equilibrium, the latter do not steal market share from the competitors and the supplier can preserve profitable sales to low-bargaining-power customers. We show that empirically trade credit is not monotonically increasing in past purchases, as is consistent with our conjecture that it targets infra-marginal units. Our results are not driven by differences in suppliers' ability to provide trade credit, customer-specific shocks or endogenous location decisions.

Dieser Eintrag ist Teil der Universitätsbibliographie.




+ Citation Example and Export

Giannetti, Mariassunta ; Serrano-Velarde, Nicolas ; Tarantino, Emanuele (2017) Cheap trade credit and competition in downstream markets. Swedish House of Finance research paper Stockholm 17-20 [Working paper]


+ Search Authors in

+ Page Views

Hits per month over past year

Detailed information



You have found an error? Please let us know about your desired correction here: E-Mail


Actions (login required)

Show item Show item