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Firm-level Simulation of Supply Chain Disruption Triggered by Actual and Predicted Earthquakes

Hiroyasu Inoue and Yasuyuki Todo

Discussion papers from Research Institute of Economy, Trade and Industry (RIETI)

Abstract: This paper reports simulations of supply chain disruptions regarding the Great East Japan Earthquake and the predicted Nankai Trough Earthquake. The simulations are based on the actual nationwide supply chains of Japan and on an agent-based model. As a result, we obtain the following findings. (1) Based on simulations of the Great East Japan Earthquake, we calibrate the parameters in the model. The result shows that the simulation reproduces the aftermath of the disaster well, which means the simulation captures the propagations of the damages and the recoveries on supply chains. (2) Indirect damages of both earthquakes geographically permeate the entire country in quite a short term. Additionally, the damages to firms show synchronized fluctuations due to the network structure. (3) Simulations of the Nankai Trough Earthquake show that direct damages are 12 times greater than those from the Great East Japan Earthquake, but indirect damages are approximately 4.5 times greater in a year. (4) By estimating indirect damage triggered by a single firm loss, approximately 10% of firms cause more than 10% of the damage of the entire supply chains.

New Economics Papers: this item is included in nep-cmp
Date: 2018-03
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https://www.rieti.go.jp/jp/publications/dp/18e013.pdf (application/pdf)

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Working Paper: Firm-level simulation of supply chain disruption triggered by actual and predicted earthquakes (2017) Downloads
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