A framework for governing competition and collaboration in network industries using agent-based modeling: A case-study of the United States air transportation

Network industries provide valuable services and products for modern life like communication and internet, utilities, logistics, and transportation. In these industries myriad of companies compete and collaborate with each other to deliver a better service or produce a superior product and earn better profit. However, three unique characteristics of these industries create a challenge which requires regulation. (1) More often than not the desirability, utility, of a product or service increases by the increase in the network of its customers or suppliers. This effect, which is called network externality, can reduce fair market competition and overall system efficiency. (2) These industries use a shared infrastructure, which is a common pool resource. This shared infrastructure requires governance to ensure effective and efficient use of it, and to maintain a sustainable growth of the system. (3) Moreover, the breadth of these infrastructures is not limited to one regulatory institution; therefore, competition among various regulatory institutions has a significant effect on the total outcome of the system.;The purpose of this study is to provide a framework to facilitate modeling and simulation of governance of network industries. The first step is to identify the structure of the system and to capture its complexity by a high-level framework. Then, modeling and simulation is used to generate a framework for abstracting this complexity and analyzing the effects of exercising different policies. Agent-based modeling, which is a powerful technique for analyzing complexity in sociotechnical systems, is used as the main modeling method. The effect of competition and collaboration among companies in a network organization in absence of network externality is simulated in the first set of models. The subsequent model analyzes the complexity of competition and collaboration in the whole network. The United States Air Transportation Network is used as the main case study. This research provides a basis for future studies in this area as well as a set of valuable models for practitioners and policy makers in network industries.