Learning strategic cooperative behavior in industrial symbiosis: A game-theoretic approach integrated with agent-based simulation

Devrim Murat Yazan*, Vahid Yazdanpanah, Luca Fraccascia*

*Corresponding author for this work

Research output: Contribution to journalArticleAcademicpeer-review

2 Citations (Scopus)
30 Downloads (Pure)

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.
Original languageEnglish
Pages (from-to)2078-2091
Number of pages14
JournalBusiness strategy and the environment
Volume29
Issue number5
Early online date3 Mar 2020
DOIs
Publication statusPublished - 1 Jul 2020

Keywords

  • UT-Hybrid-D

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