A disaster that causes a huge supply shortage can actually end up making that whole industry even richer.
March 26, 2026
Original Paper
The Redistributive Effects of Sectoral Shocks
SSRN · 6336378
The Takeaway
In complex economic networks, a negative supply shock (like a parts shortage) triggers a price spike that redistributes wealth toward the supplying sector. While the companies waiting for the parts suffer, the industry at the source of the disruption often ends up capturing a larger share of the total income in the system.
From the abstract
This paper investigates the redistributive impacts of sectoral shocks. We develop a new model combining features from both the heterogeneous agents and input-output literature, which is amenable to analyse how idiosyncratic shocks propagation redistribute wealth and income within sectors. We find that key sectors in shock transmission can be identified using the sectoral influence centrality measure. Our model also suggests that negative supply shocks generate positive redistribution effects for