Related papers: Risk Propagation in Endogenous Supply Chains
Production in an economy is a set of firms' activities as suppliers and customers; a firm buys goods from other firms, puts value added and sells products to others in a giant network of production. Empirical study is lacking despite the…
In the era of a growing population, systemic changes to the world, and the rising risk of crises, humanity has been facing an unprecedented challenge of resource scarcity. Confronting and addressing the issues concerning the scarce…
We model an economy-wide production network by cascading binary compounding functions, based on the sequential processing nature of the production activities. As we observe a hierarchy among the intermediate processes spanning the empirical…
Networks provide a skeleton for the spread of contagions, like, information, ideas, behaviors and diseases. Many times networks over which contagions diffuse are unobserved and need to be inferred. Here we apply survival theory to develop…
We show how to treat supply networks as physical transport problems governed by balance equations and equations for the adaptation of production speeds. Although the non-linear behaviour is different, the linearized set of coupled…
We investigate the structure of global inter-firm linkages using a dataset that contains information on business partners for about 400,000 firms worldwide, including all the firms listed on the major stock exchanges. Among the firms, we…
Understanding cascading failures or epidemics in networks is crucial for developing effective defensive mechanisms for many critical systems and infrastructures (e.g. biological, social and cyber networks). Most of the existing works treat…
Networks such as organizational network of a global company play an important role in a variety of knowledge management and information diffusion tasks. The nodes in these networks correspond to individuals who are self-interested. The…
In this paper, we propose a framework to solve a demand-supply optimization problem of long-term water resource allocation on a multi-connection reservoir network which, in two aspects, is different to the problem considered in previous…
In the analysis of the robustness of multiplex networks, it is commonly assumed that a node is functioning only if its interdependent nodes are simultaneously functioning. According to this model, a multiplex network becomes more and more…
Financial networks help firms manage risk but also enable financial shocks to spread. Despite their importance, existing models of financial networks have several limitations. Prior works often consider a static network with a simple…
We introduce a dynamic and stochastic interbank model with an endogenous notion of distress contagion, arising from rational worries about future defaults and ensuing losses. This entails a mark-to-market valuation adjustment for interbank…
Price-mediated contagion occurs when a positive feedback loop develops following a drop in asset prices which forces banks and other financial institutions to sell their holdings. Prior studies of such events fix the level of market…
As impressively shown by the financial crisis in 2007/08, contagion effects in financial networks harbor a great threat for the stability of the entire system. Without sufficient capital requirements for banks and other financial…
The problem of load balancing in a distribution network under unknown time- varying demand and supply is studied. A set of distributed controllers which regulate the amount of flow through the edges is designed to guarantee convergence of…
A general theory of top-down cascades in complex networks is described which explains two similar types of perturbation amplifications in the complex networks of business supply chains (the `bullwhip effect') and ecological food webs…
A key scientific challenge during the outbreak of novel infectious diseases is to predict how the course of the epidemic changes under different countermeasures that limit interaction in the population. Most epidemiological models do not…
In an increasingly interconnected world, a key scientific challenge is to examine mechanisms that lead to the widespread propagation of contagions, such as misinformation and pathogens, and identify risk factors that can trigger large-scale…
We provide an overview of the relationship between financial networks and systemic risk. We present a taxonomy of different types of systemic risk, differentiating between direct externalities between financial organizations (e.g.,…
Will a large economy be stable? Building on Robert May's original argument for large ecosystems, we conjecture that evolutionary and behavioural forces conspire to drive the economy towards marginal stability. We study networks of firms in…