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Using Game Theory to Develop Sustainability Strategies in an Era ering & ine M g a n n E a Seifi and Crowther, Ind Eng Manage 2018, 7:1 l g a i e r m t Industrial Engineering & DOI: 10.4172/2169-0316.1000240 s e u n d t n I Management ISSN: 2169-0316 Research Article Open Access Using Game Theory to Develop Sustainability Strategies in an Era of Resource Depletion Shahla Seifi and David Crowther* Faculty of Business and Law, De Montfort University, The Gateway, Leicester, LE1 9BH, UK *Corresponding author: David Crowther, Faculty of Business and Law, De Montfort University, The Gateway, Leicester, LE1 9BH, UK, Tel: +44(0)7971629198; Fax: +44(0)1332720660; E-mail: [email protected] Received date: 02 November 2017; Accepted date: 07 March 2018; Published date: 14 March 2018 Copyright: © 2018 Seifi S, et al. This is an open-access article distributed under the terms of the creative commons attribution license, which permits unrestricted use, distribution and reproduction in any medium, provided the original author and source are credited. Abstract Objective: Sustainability is recognized as an important objective in business planning and is of equal relevance to policy makers. It is equally accepted, almost universally, that the resources of the planet are finite and are being over consumed on an annual basis. The prognosis therefore is that resources are being depleted and competition for access to remaining resources must ensue, as countries seek to grow and develop. This will have the effect of increasing the transaction costs of business activity as they find greater difficulty in seeking restricted supply of resources. This poses a problem for future economic activity and therefore for the achievement of sustainability. This is compounded by the fact that individual sustainability for countries or companies does not equate to global sustainability. Method: At the same time Game Theory is recognized as a key strategic tool by policy makers and by business decision makers and is used extensively for scenario planning and strategic decision making. Although it has been recognized that Game Theory has relevance to addressing the problems of manufacturing due to resource depletion, it is surprising that no work has been done in this area. This paper therefore explains the role which this theory can play in developing strategy, and thereby promoting sustainability. Results: It does so by developing a model which can be used in demonstrating the efficacy of planning scenarios developed in this way. For this the Prisoners Dilemma version of Game Theory is used and extended. The resulting model is then discussed and the results evaluated. Further however it recognizes the resultant problems which further need to be solved. Conclusion: It concludes by discussing the resulting problems to propose a solution and way forward but also argues that further work is needed in order to promote sustainability and make it realistic in a global context. Keywords: Game theory; Sustainability; Resource depletion; Equally there can be no argument that the resources of the planet Transaction costs; Manufacturing competition; Earth overshoot; are finite and this is a limiting factor to growth and development. The Consumption; Prisoners dilemma resources available to people are heavily used - and many would say overused. So Earth Overshoot Day gets earlier each year and clearly Introduction this is not sustainable. Equally obviously once resources are used they are not available for future use and, despite the wishful thinking of In 2017 Earth Overshoot Day occurred on 2 August, 6 days earlier economists, one resource can never completely substitute for another2. than in 2016 and 11 days earlier than in 2015. Earth Overshoot Day is The lack of sufficient resources of raw materials to maintain current measured by the Global Footprint Network1 and is the day when production, let alone to provide for sustainable development as humanity has exhausted the total natural resources of the planet for the outlines by Brundtland has become known as resource depletion and is year. For the rest of the year, society operates in an effectively one of the problems which the inhabitants of the plant must currently overdrawn mode and in ecological overshoot by drawing down local face and address [2,3]. resource stocks and accumulating carbon dioxide in the atmosphere. The depletion of the resources of the planet however is one of the This overshoot first occurred in 1987 and the day in which it occurs 3 has become earlier with each succeeding year. The concept is based on factors which have helped create the current interest in sustainability the work [1]. [4]. Of particular concern is the extractive industries and such things as aluminum and tin are becoming in short supply. 1 www.footprintnetwork.org. 2 Consider for example Easter Island. Once the trees had been fully used then no resource was available as a substitute (Pakandam 2009) and such activities as sailing had to be terminated alongside the termination of the construction of the famous statues. 3 Plus all the other papers in the special issue of the Journal of Cleaner Production which was edited on the topic of Growth, Recession or Degrowth for Sustainability and Equity. Ind Eng Manage, an open access journal Volume 7 • Issue 1 • 1000240 ISSN: 2169-0316 Citation: Crowther D, Seifi S, (2018) Using Game Theory to Develop Sustainability Strategies in an Era of Resource Depletion. Ind Eng Manage 7: 240. doi:10.4172/2169-0316.1000240 Page 2 of 7 So too are many of the minerals required for the electronics Depletion and renewable resources industry. For example, in Malaysia the tin upon which Kuala Lumpur was founded has been fully extracted and recycling has become an Of particular concern is the diminishing of supplies of oil, because much economic activity is fuelled by the energy created by the use of important aspect of the industry. Kuala Lumpur [5] was founded for 6 this tin because the tin4,5 in the UK had been fully extracted long ago oil. Indeed many would argue that the wars in the Middle East , [6] and the thriving industries based around them are long gone. Thus particularly the problems in Iraq and Iran, are caused by oil shortages, the British in their drive for development moved to exploiting the actual or impending, and the problems thereby caused, rather than by any concern for political issues. Most people have now heard of resources of other parts of the world. As other resources-such as coal- 7 are extracted in total then the companies based upon them disappear, Hubbert’s Peak [14] and engaged with the debate as to whether or not it has been reached. Certainly it has in parts of the world such as the as do the jobs in those industries. This is an obvious source of concern 8 for people. USA and the North Sea but it is less certain if it has been reached for the world as a whole. Nevertheless the whole crux of sustainability and On the other hand lead in the UK had been mined for over 3000 sustainable development is based upon the need for energy and there years but by the start of the 20th century was completely exhausted are insufficient alternative sources of energy to compensate for the [7,8]. Now however the spoil from lead mining is being reworked in elimination of oil as a source of fuel. Consequently resource depletion, order to extract minerals such as fluorspar which is currently in great real or imagined, and particularly energy resources, is one of the most demand as a flux and in making enamels [9]. So it can be seen that significant causes of the current interest in sustainability [11]. recycling for other minerals is a feature of some mining, as is the exporting of mining technologies throughout the world. Managing in a One focus of attention as far as energy is concerned is the world of depleted resources is the topic of this paper and an argument development of renewable energy sources as a substitute. Currently is made for a fresh approach. about 16% of global energy is supplied by renewable sources but 10% is from traditional biomass sources and 4% is from hydro-power. A fairly small proportion therefore is from the newer developing renewable Materials and Methods sources and their growth is relatively rapid but fairly insignificant in the context of global energy demands. Currently global demands for Resource depletion energy are growing at 2% per annum but this comprises an increased demand of 4% in developing countries which is being masked by a As stated, there is a general recognition that resource depletion is reducing demand in developed countries caused by energy efficiency taking place [10]. This effectively means that resources are not just fully programmes9 utilized but also overused so that they become in short supply [11]. A lack of resources naturally increases the transaction cost of their Despite all the action being taken the effects are relatively small and acquisition. It does so both because they become more scarce and access to energy remains one of the key factors for economic activity. difficult to acquire from more remote sources but also because Equally oil remains essential for that energy production and a key competition for these limited quantities increases between the various resource to consider in any analysis of sustainability. Significantly as firms which need to acquire them. It also raises the issue of recycling of resources become depleted the transaction costs of acquiring them already used resources and certainly this is happening as far as some increase; moreover firms need to compete with each other to a greater minerals are concerned [12]. This is a developing aspect of business extent in order to acquire access to those resources.
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