Competition and collaboration in the extractive industries in a world of resource scarcity using a Game theory approach

Abstract

Sustainability has become one of the most important issues for businesses, governments and society at large. Increasingly, it features in all planning for future activity. The topic is under much debate as to what it actually is and how it can be achieved, but it is completely certain that the resources of the planet are fixed in quantity, and once used, cannot be reused except through being reused in one form or another. This is particularly true of the mineral resources of the planet. These are finite in quantity, and once fully extracted, extra quantities are no longer available for future use. In this thesis, it is argued that the remaining mineral resources are diminishing significantly and heading towards extinction. Once mined and consumed, they are no longer available for future use other than what can be recycled and reused. What is becoming important therefore – both for the present and for future sustainability – is not the extraction of minerals, but their distribution. Future scarcity means that best use must be made of what exists, as sustainability depends upon this, and best use is defined in this thesis as utility rather than economic value, and this must be considered at a global level rather than a national level. This thesis investigates the alternative methods of achieving the global distribution of these mineral resources and proposes an optimum solution. It does so by showing the efficacy of Game theory for such strategic decision-making, and by developing the theory with some extensions pertinent to the environment being described, before performing the necessary mathematical manipulations to evaluate this environment, and then applying this to real world data. The findings are supported by using linear programming and sensitivity analysis, and by using real world data. Application of the results obtained would raise a number of problems with market regulations and with the geopolitical situation, and these also are explored at length. In achieving this research, the main contribution of this thesis is through identifying the new environment and the extending of Game theory into this environment and in developing the necessary extensions. Previous research has only proposed methods to deal with this, but never actually developed and tested any model; therefore, this model itself, is a contribution. An additional contribution has been made through the application of those extensions into the practical global arena, and in the consideration of the role of regulation in the management of the market for resources in a way which is effective globally rather than locally. Essentially, this is through an understanding of the dichotomy between competition and collaboration, where this thesis argues that the conventional economic mode does not work to best results. Therefore, this thesis adds to the discourse through the understanding of the importance of the depletion and finiteness of raw materials and their use for the present and the future, in order to achieve and maintain sustainability.