Scandinavian Working Papers in Economics

Working Papers,
Copenhagen Business School, Department of Economics

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

H. Peter Møllgaard and Jochen Lorentzen
Additional contact information
H. Peter Møllgaard: Department of Economics, Copenhagen Business School, Postal: Department of Economics, Copenhagen Business School, Solbjerg Plads 3 C, 5. sal, DK-2000 Frederiksberg, Denmark
Jochen Lorentzen: Department of International Economics and Management, Postal: Department of International Economics and Management, Copenhagen Business School (CBS), Howitzvej 60, DK-2000 Frederiksberg

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

JEL-codes: D23; D40; K12; L14; L42; L62

33 pages, August 1, 2002

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