Market structure and resilience of food supply chains under extreme events

Abstract

Recent extreme events and the disruptions they caused have made food supply chain resilience a key topic for researchers and policymakers. This paper provides input into these discussions by evaluating the efficiency and resilience properties of the leading policy proposals. We develop a conceptual model of a prototype agricultural supply chain, parameterize the model based on the empirical literature, and conduct simulations to assess the impacts on resilience and economic welfare of four key policy proposals: (i) intensified antitrust enforcement to improve market competition, (ii) subsidization of entry of additional processing capacity, (iii) prevention of price spikes through anti-price-gouging laws, and (iv) diversification of production and processing across multiple regions. Results show that some of the policies have potential to improve supply-chain resilience, but their impacts depend on the existing market structure, and resilience gains often come at the cost of reduced efficiency.