The paper presented in this ZEW Research Seminar models 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. The authors 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.

Speaker

Benjamin Golub

Northwestern University, Evanston, USA

If you would like to participate and to stay up to date about upcoming presentations, please join our mailing list. You will receive the Zoom link for each talk.

The seminar presentations are scheduled to last 60 minutes: 45 minutes of presentation and 15 minutes for both comments and questions.

We will experiment with various methods for questions: A moderator collects questions during the presentation. Speakers will be encouraged to pause every few slides to allow a gap for questions. The moderator will relay clarification questions or unmute selectively during the talk. Remaining questions will be collected and asked in the discussion period.

Just like with other initiated virtual seminars, these rules are subject to change as we gain experience with how to handle the seminar most efficiently.

The idea for this format was borrowed from the Chamberlain Seminar. Other online seminars can be found at the AEA website.

The Virtual Market Design Seminar is an open online alternative to seminars cancelled due to the COVID-19. Seminars will cover all fields from market design. The seminar presentations are scheduled to last 60 minutes, after 45 minutes of presentation, 15 minutes are for both comments and question.

Date

23.05.2022 | 16:00 - 17:00 (CET)

Event Location

Online


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