Supply Network Formation and Fragility

• 成果类型: Article
• 署名作者: Elliott, Matthew; Golub, Benjamin; Leduc, Matthew, V
• 署名单位: University of Cambridge; Northwestern University; Paris School of Economics
• 刊物名称: AMERICAN ECONOMIC REVIEW
• ISSN/ISSBN: 0002-8282
• DOI: 10.1257/aer.20210220
• 发表日期: 2022
• 页码: 2701-2747
• 关键词: incomplete contracts; social-structure; CHAIN GLITCHES; input; failures; shocks; industrialization; DISRUPTIONS; specificity; COMPETITION

摘要

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. A supply network is called fragile if aggregate output is very sensitive to small aggregate shocks. We show that supply networks of intermediate productivity are fragile in equilibrium, even though this is always inefficient. The endogenous configuration of supply networks provides a new channel for the powerful amplification of shocks.