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Ameet Morjaria

Kellogg School of Management, Northwestern University

Ameet Morjaria is an Associate Professor of Managerial Economics & Decision Sciences at the Kellogg School of Management, Northwestern University. Prior to joining Kellogg, he was a Junior Scholar of Harvard Academy's Weatherhead Centre for International Affairs and a Giorgio Ruffolo Post-Doctoral Fellow in the Sustainability Science Program at the Centre for International Development, Harvard Kennedy School. Dr Morjaria completed his PhD in Economics from the London School of Economics & Political Sciences and he is a research affiliate of the NBER, BREAD, CEPR and the IGC. His research interests are in development economics, organizational economics, and political economy across several countries in Sub-Saharan Africa (Burundi, DR Congo, Ethiopia, Kenya, Rwanda, South Sudan and Uganda). His current research focuses on understanding the role of commodity exchanges, changes in firm performance due to acquisitions, industrial policy in emerging markets, and the political economy of resource management in weakly institutionalized economies.
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Competition and Relational Contracts in the Rwanda Coffee Chain

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.

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The Value of Relationships: Evidence from a Supply Shock to Kenyan Rose Exports

This paper provides evidence on the importance of reputation in the context of the Kenyan rose export sector. A model of reputation and relational contracting is developed and tested. A seller’s reputation is defined by buyer’s beliefs about seller’s reliability. We show that (i) due to lack of enforcement, the volume of trade is constrained by the value of the relationship; (ii) the value of the relationship increases with the age of the relationship; and (iii) during an exogenous negative supply shock deliveries are an inverted-U shaped function of relationship’s age. Models exclusively focusing on enforcement or insurance considerations cannot account for the evidence.

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