Global trade depends on a tiny handful of companies, meaning the whole system could collapse from one small mistake.
Large-scale economic coordination doesn't happen gradually; it requires crossing a sharp threshold. Because modern supply chains are so concentrated around a few key players, a small disruption to a single 'influential' firm can trigger a total network failure that aggregate economic data would never predict.
Coordination and Fragility in Production Networks
SSRN · 6437920
We study coordination and fragility in production networks using a role-based framework in which firms perform complementary production roles across functional segments. Large-scale coordination arises only once participation exceeds a sharp threshold. With endogenous participation, coordination comes to rely disproportionately on a small set of influential firms. This same concentration generates fragility: targeted disruptions to key firms can trigger abrupt collapses of coordination even when