Learning strategic cooperative behavior in industrial symbiosis: a game-theoretic approach integrated with agent-based simulation
Learning strategic cooperative behavior in industrial symbiosis: a game-theoretic approach integrated with agent-based simulation
This paper investigates the negotiation phase of industrial symbiosis relationships, where companies exchanging wastes for inputs need to develop strategies on how to share the additional costs to operate the industrial symbiosis business. The business behavior is approached as a “coopetition” problem where companies need to cooperate to reduce waste discharge costs and traditional input purchase costs and dive into competition to pay a minimum share of additional costs (i.e., waste treatment, waste transportation, and transaction costs) of operating industrial symbiosis. A noncooperative game-theoretical model for sharing the additional costs is proposed that highlights the two strategies that companies can adopt aimed at sharing costs: a fair strategy and an opportunistic strategy. Then, an agent-based model is used to simulate the game iterated over time and investigate how the players can adapt their strategies according to their past experience. Simulation results show that players learn that playing the fair strategy is beneficial in the long period, despite in the short period they can gain more benefit by playing the opportunistic strategy. Findings of the paper are critically important to reduce the business and managerial barriers against the formation of industrial symbiosis networks and to stimulate innovative thinking of company managers to foster the development of the circular economy. The paper proposes theoretical, managerial, and policy implications, which are discussed in detail in a comparative manner between linear and circular economy.
agent-based simulation, circular economy, game theory, industrial symbiosis, strategy management
2078-2091
Yazan, Devrim Murat
84983095-8f6e-4dbe-baeb-c9cb6d4b2e84
Yazdanpanah, Vahid
28f82058-5e51-4f56-be14-191ab5767d56
Fraccascia, Luca
fdb606a7-96f7-43e1-bc02-4cc7651afb33
1 July 2020
Yazan, Devrim Murat
84983095-8f6e-4dbe-baeb-c9cb6d4b2e84
Yazdanpanah, Vahid
28f82058-5e51-4f56-be14-191ab5767d56
Fraccascia, Luca
fdb606a7-96f7-43e1-bc02-4cc7651afb33
Yazan, Devrim Murat, Yazdanpanah, Vahid and Fraccascia, Luca
(2020)
Learning strategic cooperative behavior in industrial symbiosis: a game-theoretic approach integrated with agent-based simulation.
Business Strategy and the Environment, 29 (5), .
(doi:10.1002/bse.2488).
Abstract
This paper investigates the negotiation phase of industrial symbiosis relationships, where companies exchanging wastes for inputs need to develop strategies on how to share the additional costs to operate the industrial symbiosis business. The business behavior is approached as a “coopetition” problem where companies need to cooperate to reduce waste discharge costs and traditional input purchase costs and dive into competition to pay a minimum share of additional costs (i.e., waste treatment, waste transportation, and transaction costs) of operating industrial symbiosis. A noncooperative game-theoretical model for sharing the additional costs is proposed that highlights the two strategies that companies can adopt aimed at sharing costs: a fair strategy and an opportunistic strategy. Then, an agent-based model is used to simulate the game iterated over time and investigate how the players can adapt their strategies according to their past experience. Simulation results show that players learn that playing the fair strategy is beneficial in the long period, despite in the short period they can gain more benefit by playing the opportunistic strategy. Findings of the paper are critically important to reduce the business and managerial barriers against the formation of industrial symbiosis networks and to stimulate innovative thinking of company managers to foster the development of the circular economy. The paper proposes theoretical, managerial, and policy implications, which are discussed in detail in a comparative manner between linear and circular economy.
Text
bse.2488
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More information
Accepted/In Press date: 15 February 2020
e-pub ahead of print date: 3 March 2020
Published date: 1 July 2020
Additional Information:
Funding Information:
The project leading to this work has received funding from the European Union's Horizon 2020 research and innovation program under grant agreement 680843. We also gratefully acknowledge Prof. Vito Albino (Polytechnic University of Bari) and Prof. Rosa Maria Dangelico (Sapienza University of Rome) for their initial contributions to this paper.
Publisher Copyright:
© 2020 The Authors. Business Strategy and The Environment published by ERP Environment and John Wiley & Sons Ltd
Keywords:
agent-based simulation, circular economy, game theory, industrial symbiosis, strategy management
Identifiers
Local EPrints ID: 441448
URI: http://eprints.soton.ac.uk/id/eprint/441448
ISSN: 0964-4733
PURE UUID: 08fd7f9c-88b0-4d97-862e-1689601eb448
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Date deposited: 12 Jun 2020 16:40
Last modified: 17 Mar 2024 04:02
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Contributors
Author:
Devrim Murat Yazan
Author:
Vahid Yazdanpanah
Author:
Luca Fraccascia
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