A Model of Stratified Production Process and Spatial Risk
In 2011, Japanese firms suffered severe losses as a result of the Great East Japan Earthquake and the Thailand floods. The firms incurred damage continually because they depended on spatially dispersed supply chains. Final goods producers are essentially attracted to outsourcing because of the prevailing scale economy in modern machinery industries. In addition, certain firms have dispersed their plants to different locations to avoid risks from powerful earthquakes that are expected near most of the developed metropolitan areas in the region. Such a strategy, however, has ironically caused contiguous damage to these firms. To capture the characteristics of supply chain over space and the cascade of spatial risks, we set up a two-level structure of circles where firms can be categorized. The top circle is occupied by intermediate goods producers, who provide differentiated inputs for the final goods producers in the second circle. We assume that scale economy works with respect to the variety of intermediate goods. Thus, final goods producers purchase inputs from intermediate goods producers located in different places, while paying transport costs in the process. We then evaluate the two-level structure in terms of location-specific hazards such as earthquakes. A more dispersed supply chain corresponds to a greater likelihood that final goods producers would suffer losses from the spatial risk. Simulation results reveal that the expected damage may be less for intermediate goods producers with more dispersed locations. On the contrary, final goods producers may be better served being spatially concentrated. Copyright Springer Science+Business Media New York 2015
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.
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.
Volume (Year): 15 (2015)
Issue (Month): 2 (June)
|Contact details of provider:|| Web page: http://www.springer.com|
|Order Information:||Web: http://www.springer.com/economics/regional+science/journal/11067/PS2|
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.:
- Henriet, Fanny & Hallegatte, Stéphane & Tabourier, Lionel, 2012.
"Firm-network characteristics and economic robustness to natural disasters,"
Journal of Economic Dynamics and Control,
Elsevier, vol. 36(1), pages 150-167.
- Henriet, F. & Hallegatte, S. & Tabourier, L., 2011. "Firm-Network Characteristics and Economic Robustness to Natural Disasters," Working papers 355, Banque de France.
- Fanny Henriet & Stéphane Hallegatte & Lionel Tabourier, 2012. "Firm-network characteristics and economic robustness to natural disasters," Post-Print hal-00716554, HAL.
- Oded Cats & Erik Jenelius, 2014. "Dynamic Vulnerability Analysis of Public Transport Networks: Mitigation Effects of Real-Time Information," Networks and Spatial Economics, Springer, vol. 14(3), pages 435-463, December.
- Venables, Anthony J, 1996. "Equilibrium Locations of Vertically Linked Industries," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 37(2), pages 341-359, May.
- Anthony J. Venables, 1993. "Equilibrium Locations of Vertically Linked Industries," CEP Discussion Papers dp0137, Centre for Economic Performance, LSE.
- Venables, Anthony J, 1993. "Equilibrium Locations of Vertically Linked Industries," CEPR Discussion Papers 802, C.E.P.R. Discussion Papers.
- Yasuyuki Todo & Kentaro Nakajima & Petr Matous, 2015. "How Do Supply Chain Networks Affect The Resilience Of Firms To Natural Disasters? Evidence From The Great East Japan Earthquake," Journal of Regional Science, Wiley Blackwell, vol. 55(2), pages 209-229, 03.
- TODO Yasuyuki & NAKAJIMA Kentaro & Petr MATOUS, 2013. "How Do Supply Chain Networks Affect the Resilience of Firms to Natural Disasters? Evidence from the Great East Japan Earthquake," Discussion papers 13028, Research Institute of Economy, Trade and Industry (RIETI).
- World Bank & United Nations, 2010. "Natural Hazards, UnNatural Disasters : The Economics of Effective Prevention," World Bank Publications, The World Bank, number 2512, December.
- Robert C. Feenstra, 1998. "Integration of Trade and Disintegration of Production in the Global Economy," Journal of Economic Perspectives, American Economic Association, vol. 12(4), pages 31-50, Fall.
- Robert C. Feenstra, "undated". "Integration Of Trade And Disintegration Of Production In The Global Economy," Department of Economics 98-06, California Davis - Department of Economics.
- Robert Feenstra, 2003. "Integration Of Trade And Disintegration Of Production In The Global Economy," Working Papers 986, University of California, Davis, Department of Economics.
- Francisco Silva & Lucia Gao, 2013. "A Joint Replenishment Inventory-Location Model," Networks and Spatial Economics, Springer, vol. 13(1), pages 107-122, March.
- StÃ©phane Hallegatte & Valentin Przyluski, 2010. "The Economics of Natural Disasters," CESifo Forum, Ifo Institute - Leibniz Institute for Economic Research at the University of Munich, vol. 11(2), pages 14-24, July.
- Johannes Illenberger & Kai Nagel & Gunnar Flötteröd, 2013. "The Role of Spatial Interaction in Social Networks," Networks and Spatial Economics, Springer, vol. 13(3), pages 255-282, September.
- Carliss Y. Baldwin & Kim B. Clark, 2000. "Design Rules, Volume 1: The Power of Modularity," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262024667, January.
- Mehrdad Shahabi & Shirin Akbarinasaji & Avinash Unnikrishnan & Rachel James, 2013. "Integrated Inventory Control and Facility Location Decisions in a Multi-Echelon Supply Chain Network with Hubs," Networks and Spatial Economics, Springer, vol. 13(4), pages 497-514, December.
- Masoud Yaghini & Mohammadreza Sarmadi & Nariman Nikoo & Mohsen Momeni, 2014. "Capacity Consumption Analysis Using Heuristic Solution Method for Under Construction Railway Routes," Networks and Spatial Economics, Springer, vol. 14(3), pages 317-333, December.
- Ethier, Wilfred J, 1982. "National and International Returns to Scale in the Modern Theory of International Trade," American Economic Review, American Economic Association, vol. 72(3), pages 389-405, June.
- Donald R. Davis & David E. Weinstein, 2002. "Bones, Bombs, and Break Points: The Geography of Economic Activity," American Economic Review, American Economic Association, vol. 92(5), pages 1269-1289, December.
- Donald R. Davis & David E. Weinstein, 2001. "Bones, Bombs and Break Points: The Geography of Economic Activity," NBER Working Papers 8517, National Bureau of Economic Research, Inc.