Supply Network Formtion and Fragility - INRAE - Institut national de recherche pour l’agriculture, l’alimentation et l’environnement Accéder directement au contenu
Pré-Publication, Document De Travail Année : 2021

Supply Network Formtion and Fragility

Résumé

We model the production of complex goods in a large supply network. Each firm sources several essential inputs through relationships with other firms. Individual supply relationships are at risk of idiosyncratic failure, which threatens to disrupt production. To protect against this, firms multisource inputs and strategically invest to make relationships stronger, trading off the cost of investment against the benefits of increased robustness. We find that equilibrium aggregate production is robust to idiosyncratic disruptions. Nevertheless, there is a regime in which arbitrarily small systemic shocks cause arbitrarily steep drops in output, so that the the supply network is fragile. The endogenous configuration of supply networks provides a new channel for the powerful amplification of shocks.
Fichier principal
Vignette du fichier
wp_202155_.pdf (2.65 Mo) Télécharger le fichier
Origine : Fichiers produits par l'(les) auteur(s)

Dates et versions

halshs-03359607 , version 1 (30-09-2021)

Identifiants

  • HAL Id : halshs-03359607 , version 1

Citer

Matthew Elliott, Benjamin Golub, Matthew V Leduc. Supply Network Formtion and Fragility. 2021. ⟨halshs-03359607⟩
104 Consultations
96 Téléchargements

Partager

Gmail Facebook X LinkedIn More