Dual Sourcing and Resilient Supply Chains: The Case of Essential Resources

Thomas Gehrig*, Rune Stenbacka

*Corresponding author for this work

Research output: Contribution to journalArticleScientificpeer-review


The resilience of supply chains is analyzed in a model of strategic technology investments in markets with essential resources. With a monopoly supplier, dual sourcing is a strategy to reduce switching costs in the long-run. It serves as an insurance mechanism against future opportunism by providing access to competitive global markets. Investments in dual sourcing are required to limit abuse of market power by the active source provider, even though the option of dual sourcing may not be exercised in equilibrium. The analysis has implications for the European natural gas market. Liquefied natural gas terminals may serve a strategic purpose of limiting ex-post opportunism even when delivering gas by pipeline is more efficient.
Original languageEnglish
Peer-reviewed scientific journalAtlantic Economic Journal
Publication statusPublished - 11.12.2023
MoE publication typeA1 Journal article - refereed


  • 511 Economics
  • dual sourcing
  • resilience
  • switching costs
  • predatory investments
  • supply security
  • geopolitics


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