<abstract xmlns="http://www.w3.org/1999/xhtml">

<p>Supply security is threatened by technical, business, natural and policy shocks, as well as geopolitical tensions. Is there a rationale for policy intervention? If yes, what are efficient and effective measures that achieve de-risking? This article first explains why private incentives do not generally lead to an optimal diversification of supply sources, and then discusses measures that strengthen protection against and resilience in the face of shocks. Governments should refrain from policies that further disincentivise diversification such as the <italic>ex post</italic> skimming of excess profits when adverse shocks force the halt of production and should work on framework conditions that facilitate diversification. Importantly, most measures are best taken at the EU level.</p>
</abstract>

Supply security is threatened by technical, business, natural and policy shocks, as well as geopolitical tensions. Is there a rationale for policy intervention? If yes, what are efficient and effective measures that achieve de-risking? This article first explains why private incentives do not generally lead to an optimal diversification of supply sources, and then discusses measures that strengthen protection against and resilience in the face of shocks. Governments should refrain from policies that further disincentivise diversification such as the ex post skimming of excess profits when adverse shocks force the halt of production and should work on framework conditions that facilitate diversification. Importantly, most measures are best taken at the EU level.

Improving Supply Security: Guidelines and Policy Proposals

Intereconomics

This work is licensed under the Creative Commons Attribution 4.0 International License.

{"article-title":"Improving Supply Security: Guidelines and Policy Proposals"}

Supply security is threatened by technical, business, natural and policy shocks, as well as geopolitical tensions. Is there a rationale for policy...

Improving Supply Security: Guidelines and Policy Proposals

Published Online: Jun 10, 2024

Page range: 146 - 153

DOI: https://doi.org/10.2478/ie-2024-0031

© 2024 Gabriel Felbermayr et al., published by Sciendo

This work is licensed under the Creative Commons Attribution 4.0 International License.