Horizontal collaboration in forestry: game theory models and algorithms for trading demands

Abstract: In this paper, we introduce a new cooperative game theory model that we call production-distribution game to address a major open problem for operations research in forestry, raised by R\"onnqvist et al. in 2015, namely, that of modelling and proposing efficient sharing principles for practical collaboration in transportation in this sector. The originality of our model lies in the fact that the value/strength of a player does not only depend on the individual cost or benefit of the objects she owns but also depends on her market shares (customers demand). We show however that the production-distribution game is an interesting special case of a market game introduced by Shapley and Shubik in 1969. As such it exhibits the nice property of having a non-empty core. We then prove that we can compute both the nucleolus and the Shapley value efficiently, in a nontrivial and interesting special case. We in particular provide two different algorithms to compute the nucleolus: a simple separation algorithm and a fast primal-dual algorithm. Our results can be used to tackle more general versions of the problem and we believe that our contribution paves the way towards solving the challenging open problem herein.