Advanced Search
MyIDEAS: Login

Uncertainty, Risk Aversion, And Optimal Defense Against Interruptions In Supply

Contents:

Author Info

  • Martin McGuire

Abstract

Recent international conflicts have resurrected concerns about how to manage supply disruptions or sudden escalation of need for energy, and other critical imports such as vaccines or military components. Prominent proactive measures include support of domestic production and accumulation of reserves or maintenance of stand-by production. This paper develops a clear transparent method for comparing instruments and for identifying the optimum policy mix. We show how a country's risk aversion influences the best mix of policies and interacts unexpectedly with the degree of risk itself. Specifically, high-risk aversion and low risk are shown to favor domestic production support as the better defense, and to disfavor stockpiling (and vice versa). In clarifying a country's best policy response to risks of supply interruption, this analysis predicts how income level and risk aversion characteristics should shape arguments for and against interference with free trade on grounds of 'national security.'

Download Info

If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
File URL: http://www.tandfonline.com/doi/abs/10.1080/10242690600612688
Download Restriction: Access to full text is restricted to subscribers.

As the access to this document is restricted, you may want to look for a different version under "Related research" (further below) or search for a different version of it.

Bibliographic Info

Article provided by Taylor & Francis Journals in its journal Defence and Peace Economics.

Volume (Year): 17 (2006)
Issue (Month): 4 ()
Pages: 287-309

as in new window
Handle: RePEc:taf:defpea:v:17:y:2006:i:4:p:287-309

Contact details of provider:
Web page: http://www.tandfonline.com/GDPE20

Order Information:
Web: http://www.tandfonline.com/pricing/journal/GDPE20

Related research

Keywords: Stockpiles; Risk Management; Embargo Protection; Risk Aversion; Emergency Preparations;

References

References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
as in new window
  1. Ehrlich, Isaac & Becker, Gary S, 1972. "Market Insurance, Self-Insurance, and Self-Protection," Journal of Political Economy, University of Chicago Press, vol. 80(4), pages 623-48, July-Aug..
  2. Williams,Jeffrey C. & Wright,Brian D., 1991. "Storage and Commodity Markets," Cambridge Books, Cambridge University Press, number 9780521326162, December.
  3. McGuire, M., 2000. "Provision for Adversity: Managing Supply Uncertainties in an Era of Globalization," Papers 99-00-16, California Irvine - School of Social Sciences.
  4. Toshihiro Ihori, 1999. "Protection against national emergency: International public goods and insurance," Defence and Peace Economics, Taylor & Francis Journals, vol. 10(2), pages 117-137.
  5. McGuire, Martin C & Pratt, John & Zeckhauser, Richard, 1991. " Paying to Improve Your Chances: Gambling or Insurance?," Journal of Risk and Uncertainty, Springer, vol. 4(4), pages 329-38, December.
Full references (including those not matched with items on IDEAS)

Citations

Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
as in new window

Cited by:
  1. Toshihiro Ihori & Martin McGuire, 2006. "Group Provision Against Adversity: Security By Insurance vs. Protection," CARF F-Series CARF-F-086, Center for Advanced Research in Finance, Faculty of Economics, The University of Tokyo.

Lists

This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

Statistics

Access and download statistics

Corrections

When requesting a correction, please mention this item's handle: RePEc:taf:defpea:v:17:y:2006:i:4:p:287-309. See general information about how to correct material in RePEc.

For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Michael McNulty).

If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

If references are entirely missing, you can add them using this form.

If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.

If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

Please note that corrections may take a couple of weeks to filter through the various RePEc services.