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Department of Economics, Copenhagen Business School Working Paper Series, Department of Economics, Copenhagen Business School

No 10-2002:
EXCLUSIVE SAFEGUARDS AND TECHNOLOGY TRANSFER: Subcontracting Agreements in Eastern Europe’s Car Component Industry

H. Peter Møllgaard and Jochen Lorentzen

Abstract: We study the rationale for the use of exclusivity to protect transfer of technology in

subcontracting agreements. The legal possibility arises through the EU Notice on

Subcontracting. Empirically, the link between exclusive agreements and technology transfer

among firms in the automotive supply industry in EU candidate countries is surprisingly weak,

although with exclusive-supply or exclusive-buying clauses in subcontracting agreements

upstream transfer of technology is more likely. Exclusive agreements are often reciprocal, and

are typically passed on. Downstream firms are more likely to face and use vertical restraints.

Technology trickles upstream: Multinational final assemblers transfer more technology than

lower-tier suppliers.

Keywords: Transfer of technology; subcontracting; exclusive agreements; automotive supply industry; vertical restraints; (follow links to similar papers)

JEL-Codes: D23; D40; K12; L14; L42; L62; (follow links to similar papers)

33 pages, August 1, 2002

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