Thesis On Supply Chain Risk Management

Thesis On Supply Chain Risk Management-83
We demonstrate that when the social planner values reliability over market competition, it is optimal to offer ex ante subsidies alone. Conversely, when competition outweighs the benefits of reliability, a combination of ex ante and ex post subsidies is optimal. The exogenous channels measure the extent to which productivity is influenced by the partners' characteristics (e.g.

We demonstrate that when the social planner values reliability over market competition, it is optimal to offer ex ante subsidies alone. Conversely, when competition outweighs the benefits of reliability, a combination of ex ante and ex post subsidies is optimal. The exogenous channels measure the extent to which productivity is influenced by the partners' characteristics (e.g.

We show that firms may strategicallybuy insurance purely as a commitment mechanism to prevent excessive free-riding by other firms.

Specifically, we show that contractual incentives aloneleave wealth-constrained firms with low incentives to prevent operational ac-cidents, and firms with sufficient wealth with excessive incentives.

The second essay unveils a previously unexplored role of business insurance in managing supply chain risk.

We show that firms may strategically buy insurance purely as a commitment mechanism to prevent excessive free-riding by other firms.

We find that the endogenous channel is the primary source of spillovers.

We also find that a firm's productivity is influenced more by the operational, than by the financial characteristics of its partners.

Firms in these industries may be discouraged from entering the market as a result of these costs.

If entry is inefficiently low, a social planner can incentivize firms through ex ante subsidies, which defray the costs associated with making operations safer, or ex post subsidies, which mitigate the financial damages caused by the accident.

Insuranceallows the latter firms to credibly commit to lower effort, thereby mitigatingthe incentives of the wealth-constrained firms to free-ride.

The third essay explores the interplay between public policy and riskmanagement, when governments must strike a balance between safety andindustry welfare.

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