Relief and Stimulus in A Cross-sector Multi-product Scarce Resource Supply Chain Network

TL;DR

This paper introduces a novel decentralized model for cross-sector scarce resource supply chains, analyzing policy impacts on supply relief and welfare stimulation through a network equilibrium framework.

Contribution

It develops the first comprehensive model capturing scarce resource dynamics under fiscal policies, with new theoretical properties including the lowest eigenvalue of the Jacobian.

Findings

Model characterizes supply chain equilibrium with unique properties.

Illustrative examples demonstrate policy effectiveness.

Insights inform fiscal policy and resource management strategies.

Abstract

In the era of a growing population, systemic changes to the world, and the rising risk of crises, humanity has been facing an unprecedented challenge of resource scarcity. Confronting and addressing the issues concerning the scarce resource's conservation, competition, and stimulation by grappling its characteristics and adopting viable policy instruments calls the decision-maker's attention with a paramount priority. In this paper, we develop the first general decentralized cross-sector supply chain network model that captures the unique features of scarce resources under a unifying fiscal policy scheme. We formulate the problem as a network equilibrium model with finite-dimensional variational inequality theories. We then characterize the network equilibrium with a set of classic theoretical properties, as well as with a set of properties that are novel to the network games application literature, namely, the lowest eigenvalue of the game Jacobian. Lastly, we provide a series of illustrative examples, including a medical glove supply network, to showcase how our model can be used to investigate the efficacy of the imposed policies in relieving supply chain distress and stimulating welfare. Our managerial insights inform and expand the political dialogues on fiscal policy design, public resource legislation, social welfare redistribution, and supply chain practice toward sustainability.