孙 晔Ye Sun

Endogeneous Production Network and Knowledge Diffusion in Supplier-Customer Relationships

| abstract | slides |

Endogenous Plucking Through Networks: The Plucking Paradox

with Hanbaek Lee

| paper |

We develop a model in which firms endogenously build production networks during expansions. Denser networks raise efficiency in good times but amplify downturns when productivity falls, generating size and duration dependence in recessions. We characterize the optimal policy and show a “plucking paradox”: the planner prefers higher normal-time output despite greater exposure to rare, severe contractions.