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Vacancies in supply chain networks

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  • Hatfield, John William
  • Kominers, Scott Duke

Abstract

We use the supply chain matching framework to study the effects of firm exit. We show that the exit of an initial supplier or end consumer has monotonic effects on the welfare of initial suppliers and end consumers but may simultaneously have positive and negative effects on intermediaries. Furthermore, we demonstrate that there are no clear comparative statics for the effects of intermediary exit on the welfare of other firms; most surprisingly, intermediary exit may diminish the welfare of other firms at the same level of the supply chain.

Suggested Citation

  • Hatfield, John William & Kominers, Scott Duke, 2013. "Vacancies in supply chain networks," Economics Letters, Elsevier, vol. 119(3), pages 354-357.
  • Handle: RePEc:eee:ecolet:v:119:y:2013:i:3:p:354-357
    DOI: 10.1016/j.econlet.2013.02.004
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    References listed on IDEAS

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    1. Daron Acemoglu & Vasco M. Carvalho & Asuman Ozdaglar & Alireza Tahbaz‐Salehi, 2012. "The Network Origins of Aggregate Fluctuations," Econometrica, Econometric Society, vol. 80(5), pages 1977-2016, September.
    2. Klaus, Bettina & Walzl, Markus, 2009. "Stable many-to-many matchings with contracts," Journal of Mathematical Economics, Elsevier, vol. 45(7-8), pages 422-434, July.
    3. Echenique, Federico & Oviedo, Jorge, 2006. "A theory of stability in many-to-many matching markets," Theoretical Economics, Econometric Society, vol. 1(2), pages 233-273, June.
    4. John William Hatfield & Paul R. Milgrom, 2005. "Matching with Contracts," American Economic Review, American Economic Association, vol. 95(4), pages 913-935, September.
    5. Joskow, Paul L, 1987. "Contract Duration and Relationship-Specific Investments: Empirical Evidence from Coal Markets," American Economic Review, American Economic Association, vol. 77(1), pages 168-185, March.
    6. Mo, Jie-Ping, 1988. "Entry and structures of interest groups in assignment games," Journal of Economic Theory, Elsevier, vol. 46(1), pages 66-96, October.
    7. John William Hatfield & Scott Duke Kominers, 2012. "Matching in Networks with Bilateral Contracts," American Economic Journal: Microeconomics, American Economic Association, vol. 4(1), pages 176-208, February.
    8. Williamson, Oliver E, 1983. "Credible Commitments: Using Hostages to Support Exchange," American Economic Review, American Economic Association, vol. 73(4), pages 519-540, September.
    9. Parsons, Donald O, 1972. "Specific Human Capital: An Application to Quit Rates and Layoff Rates," Journal of Political Economy, University of Chicago Press, vol. 80(6), pages 1120-1143, Nov.-Dec..
    10. Kelso, Alexander S, Jr & Crawford, Vincent P, 1982. "Job Matching, Coalition Formation, and Gross Substitutes," Econometrica, Econometric Society, vol. 50(6), pages 1483-1504, November.
    11. Michael Ostrovsky, 2008. "Stability in Supply Chain Networks," American Economic Review, American Economic Association, vol. 98(3), pages 897-923, June.
    12. Blum, Yosef & Roth, Alvin E. & Rothblum, Uriel G., 1997. "Vacancy Chains and Equilibration in Senior-Level Labor Markets," Journal of Economic Theory, Elsevier, vol. 76(2), pages 362-411, October.
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    Cited by:

    1. Sonja Brangewitz & Claus-Jochen Haake & Philipp Moehlmeier, 2015. "Strategic Formation of Customer Relationship Networks," Working Papers CIE 91, Paderborn University, CIE Center for International Economics.
    2. Flanagan, Francis X., 2014. "The substitutes condition and the lattice structure of the set of stable allocations," Journal of Mathematical Economics, Elsevier, vol. 53(C), pages 106-110.

    More about this item

    Keywords

    Matching; Networks; Stability; Vacancy chains;

    JEL classification:

    • C78 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Bargaining Theory; Matching Theory
    • L14 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Transactional Relationships; Contracts and Reputation

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