Abstract

This research is an application of game theory to model the evolution of supply chains, focusing on buyer-supplier relationships in a procurement market context with multiple, choice-attribute dimensions. Buyer and seller agents make individual decisions, based on limited information about the market and their options. Choosing from among a set of local, national and global trading partners, they are subject to the cost-service trade-offs inherent in these alternatives. Through repeated games, buyers and sellers form preferences for specific trading partners based on past interactions, and buyers may adjust their tolerances for risk based on market conditions. By providing a modelling system for scenario-based development of the end points of the supply chain, this research represents a departure from the common methods of forecasting freight flows based on an assumed continuation of existing commodity-flow relationships. It is designed to help planners and policy makers assess how changes in infrastructure provision, global trade, and macroeconomic factors might affect the patterns of freightflows in their region.