Finance seminar with Nicolas Serrano-Velarde, Bocconi University
The Department of Finance is proud to announce the upcoming seminar with Nicolas Serrano-Velarde from Bocconi University
Nicolas Serrano-Velarde will present:
Mariassunta Giannetti, Stockholm School of Economics, CEPR and ECGI
Nicolas Serrano-Velarde, Bocconi University
Emanuele Tarantino, University of Mannheim and CEPR
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 dierences in suppliers' ability to provide trade credit, customer-specific shocks or endogenous location decisions.
Solbjerg Plads 3, 2000 Frederiksberg