Dual Sourcing and Resilient Supply Chains: The Case of Essential Resources

Thomas Gehrig and Rune Stenbacka
Additional contact information
Rune Stenbacka: Hanken School of Economics and Helsinki Graduate School of Economics

Atlantic Economic Journal, 2023, vol. 51, issue 4, No 1, 223-241

Abstract: Abstract The resilience of supply chains is analyzed in a model of strategic technology investments in markets with essential resources. With a monopoly supplier, dual sourcing is a strategy to reduce switching costs in the long-run. It serves as an insurance mechanism against future opportunism by providing access to competitive global markets. Investments in dual sourcing are required to limit abuse of market power by the active source provider, even though the option of dual sourcing may not be exercised in equilibrium. The analysis has implications for the European natural gas market. Liquefied natural gas terminals may serve a strategic purpose of limiting ex-post opportunism even when delivering gas by pipeline is more efficient.

Keywords: Dual sourcing; Resilience; Switching costs; Predatory investments; Supply security; Geopolitics; D43; H54; L13; L41; L95 (search for similar items in EconPapers)
Date: 2023
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
http://link.springer.com/10.1007/s11293-023-09782-9 Abstract (text/html)
Access to the full text of the articles in this series is restricted.

Related works:
Working Paper: Dual Sourcing and Resilient Supply Chains: The Case of Essential Ressources (2022)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:kap:atlecj:v:51:y:2023:i:4:d:10.1007_s11293-023-09782-9

Ordering information: This journal article can be ordered from
http://www.springer. ... cs/journal/11293/PS2

DOI: 10.1007/s11293-023-09782-9

Access Statistics for this article

Atlantic Economic Journal is currently edited by Kathleen S. Virgo

More articles in Atlantic Economic Journal from Springer, International Atlantic Economic Society Contact information at EDIRC.
Bibliographic data for series maintained by Sonal Shukla () and Springer Nature Abstracting and Indexing ().