Supply Chains Disruptions and Resilience
Paper Session
Saturday, Jan. 3, 2026 10:15 AM - 12:15 PM (EST)
- Chair: Anais Galdin, Dartmouth College
The Price of Delays: Supply Chain Disruptions and Pricing Dynamics
Abstract
We study the role of supply chain disruptions in shaping consumer prices, focusing on both firms’ ownimport shocks and strategic responses to competitors’ disruptions. Using a newly constructed microlevel dataset that links transaction-level U.S. import data from Bills of Lading with high-frequency consumer prices and sales from Numerator, we develop a novel approach to estimate the price effects of cost shocks and product availability. Motivated by a model of delivery delays, cost shocks, and firm pricing, we implement a shift-share identification strategy based on delivery shortfalls, port congestion, and freight and import costs. We find sizable pass-through elasticities: firms raise prices in response to higher import costs and delivery delays, especially when disruptions persist. We also identify strategic pricing: firms—including non-importers—increase prices in response to competitors’ supply chain disruptions. Using our estimates, we use our model to decompose price dynamics during the pandemic and show that strategic interactions significantly amplified the direct effects of supply chain shocks on consumer prices.
Input Sourcing under Climate Risk: Evidence from U.S. Manufacturing Firms
Abstract
We study the effect of climate risk on how firms organize their supply chains. We use transaction-level data on U.S. manufacturing imports to construct a novel measure of input sourcing risk based on the historical volatility of ocean shipping times. Our measure isolates the unexpected component of shipping times that is induced by weather conditions along more than 40,000 maritime routes. We first document that unexpected shipping delays induced by weather shocks have significant negative effects on importers’ revenues, profits, and employment. We then show that more exposed firms actively diversify the risk of weather delays by using more routes and sourcing from more foreign suppliers, although their total imports decline. To rationalize these findings, we introduce shipping time risk into a general equilibrium model of importing with firm heterogeneity. Our quantitative analysis predicts substantial costs for the U.S. economy associated with different sources of supply chain risk.Resilience of Global Supply Chains and Generic Drug Shortages
Abstract
Since 2009, the United States has experienced persistent shortages of off-patent injectable drugs, defying the expectation that competitive pressures would quickly resolve excess demand. This paper shows that these shortages arise from two key market failures in a globalized supply chain: (i) pervasive traceability problems that hide where and how drugs are manufactured, and (ii) an institutionalized assumption that all generic versions are perfect substitutes. Together, these frictions leave buyers unable to identify and reward reliable suppliers, fueling adverse selection once markets open to offshoring. I document the causal impact of offshore facilities on U.S. shortages by constructing a novel dataset that, for the first time, maps the exact manufacturing location of drug products sold in the U.S., thereby resolving longstanding traceability issues. Using these data, I then develop and estimate a partial-equilibrium model of global procurement in which manufacturers trade off cost-cutting and reliability, endogenously translating into higher disruption risks in offshore locations. The inability to capture and reward supply resilience under the current procurement system, combined with short-term pricing and capacity rigidities, generates persistent shortages once markets open to global competition. The model explicitly accounts for potential excess demand in logit-based estimations, enabling us to recover location-specific disruption probabilities and cost parameters. Counterfactual simulations reveal that reshoring subsidies modestly curtail shortages and result in substantial price hikes. In contrast, reforming procurement contracts to recognize variation in production quality significantly lowers disruptions and increases consumer welfare by incentivizing reliability investments. These findings highlight the importance of market design and transparency in global supply chains and show how failing to capture and reward manufacturing quality can lead to persistent disruptions even in highly contestable, commodity-like markets.Discussant(s)
Stephen Yeaple
,
Pennsylvania State University
Vanessa Alviarez
,
IADB
Myeongwan Kim
,
Dartmouth College and Aarhus University
Aaron Flaaen
,
Federal Reserve Board and Georgetown University
JEL Classifications
- F1 - Trade
- L1 - Market Structure, Firm Strategy, and Market Performance