IDEAS home Printed from https://ideas.repec.org/p/cpr/ceprdp/21507.html

Strategic Investment in Supply Chain Resilience under Geopolitical Interference: Theory and Policy Implications

Author

Listed:
  • Gehrig, Thomas
  • Stenbacka, Rune

Abstract

We characterize strategic investments in supply chain resilience when facing endogenously generated supply disruptions by an adversarial foreign rival in a geopolitical duopoly. The resilience investment has a strategic deterrence effect on rival investments in disruption. However, the domestic firm has insufficient incentives to invest in supply chain resilience, thereby justifying a subsidy policy. We characterize the optimal subsidy policy and show that it depends on the effectiveness of the interference technology available to the rival in the autocratic country if this interference operates through the market channel but not if it operates through the cost channel.

Suggested Citation

  • Gehrig, Thomas & Stenbacka, Rune, 2026. "Strategic Investment in Supply Chain Resilience under Geopolitical Interference: Theory and Policy Implications," CEPR Discussion Papers 21507, Centre for Economic Policy Research.
    • Handle: RePEc:cpr:ceprdp:21507
    as

    Download full text from publisher

    File URL: https://cepr.org/publications/DP21507
    Download Restriction: no
    ---><---

    More about this item

    Keywords

    ;
    ;
    ;

    JEL classification:

    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets
    • D43 - Microeconomics - - Market Structure, Pricing, and Design - - - Oligopoly and Other Forms of Market Imperfection
    • F12 - International Economics - - Trade - - - Models of Trade with Imperfect Competition and Scale Economies; Fragmentation
    • F61 - International Economics - - Economic Impacts of Globalization - - - Microeconomic Impacts

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:cpr:ceprdp:21507. See general information about how to correct material in RePEc.

    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.

    We have no bibliographic references for this item. You can help adding them by using 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 RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: CEPR (email available below). General contact details of provider: https://cepr.org/ .

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

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.