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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
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
0964-4733
2078-2091
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
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), 2078-2091. (doi:10.1002/bse.2488).

Record type: Article

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.

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bse.2488 - Version of Record
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More information

Accepted/In Press date: 15 February 2020
e-pub ahead of print date: 3 March 2020
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
ORCID for Vahid Yazdanpanah: ORCID iD orcid.org/0000-0002-4468-6193

Catalogue record

Date deposited: 12 Jun 2020 16:40
Last modified: 16 Sep 2021 11:14

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Contributors

Author: Devrim Murat Yazan
Author: Vahid Yazdanpanah ORCID iD
Author: Luca Fraccascia

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