From production networks to geographical economics

Authors: Gerard Weisbuch and Stefano Battiston

Journal of Economic Behavior and Organization (2007)

Abstract

Although standard economics textbooks are seldom interested in production networks, modern economies are more and more based upon supplier/customer interactions.Onecan consider entire sectors of theeconomy as generalised supply chains.We will take this view in the present paper and study under which conditions local failures to produce or simply to deliver can result in avalanches of shortage and bankruptcies and in localisation of the economic activity.We will showthat a large class of models exhibit scale free distributions of production and wealth among firms and that regions of high production are localised.