Analyzing Transactions Costs in Transport Corridors Using Multi Agent-Based Simulation

Analyzing Transactions Costs in Transport Corridors Using Multi Agent-Based Simulation

Lawrence Henesey (Blekinge Institute of Technology, Sweden) and Jan A. Persson (Blekinge Institute of Technology, Sweden)
Copyright: © 2009 |Pages: 15
DOI: 10.4018/978-1-60566-226-8.ch017


In analyzing freight transportation systems, such as the intermodal transport of containers, often direct monetary costs associated with transportation are used to evaluate or determine choice of Transport Corridor. In forming decisions on Transport Corridor cooperation, this chapter proposes that transaction cost Simulation modelling can be considered as an additional determinant in conducting Transport Corridor analysis. The application of Transaction Costs theory in analyzing the organisational structures and the transactions that occur, assists in indicating as to which governance structure results in higher efficiencies. The use of Multi-Agent based Simulation for modelling the organisational structure and mechanisms provides a novel approach in understanding the organisational relationships in a regional Transport Corridor.
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The purpose of this chapter is to apply elements from Transaction Costs economic theory in the design of a conceptual computer Simulation model for analysing cooperation choice of Transport Corridor. The Simulation model adopts a Multi-Agent approach in coordinating the intelligent behaviour among a collection of autonomous Agents representing actors involved in the transportation of goods. This technological approach implies that the Agents would be modelled to represent both users and providers in a Transport Corridor for Simulation and analysis. The Agents would be seeking to satisfy their own goals rather than searching an optimal organisational solution. Contracts and negotiations could be simulated and organisational structures analyzed, i.e., market, vertical and contract. The application of Transaction Costs theory would assist in explaining or predicting the behaviour of actors in a Transport Corridor. Additionally, Multi-Agent based Simulation (MABS) could assist in analysing the decisions that are influenced by the different levels of Transaction Costs, such as whether shipping lines should purchase or build their own Terminals as opposed to using Terminals of others (make or buy). The research question that is studied is: “how can agent-based technology be used in analyzing the Transaction Costs and organisational structures in a Transport Corridor?”

A market has to exist first before governance structures can be formed (Klos 2000). Therefore the objective of the research presented in this chapter is to analyze how the real organisations represented as Agents and their transactions, which are incorporated in a model, influence the choice of a suitable structure for organisation in a Transport Corridor. In order to achieve this objective, we study goods transferred through the entire transport chain, from origin to final destination, in the most efficient manner, i.e., cost- and time-effective. Some examples of cooperation in transport chains are:

  • The use of a common standard, e.g. an ISO container, may create strong interconnectivity with other actors in the organisation of shipping.

  • Improve the operations and utilization of resources. For instance, it is important that time tables meet customer requirements.

  • Use of new technologies which may help to bind firms closer, settle claims and develop trust.

The chapter is structured as follows: In Section 2 a description of transaction cost theory is presented. The components that are to be represented by Agents, in a generic Transport Corridor are described in Section 3. A Simulation architecture based on a MABS approach is presented in Section 4. The model and design of the simulator is outlined in Section 5. Finally, in Section 6, we discuss our conclusions and provide an outlook onto future work.


Description Of Transaction Cost Theory

In the book “The Nature of the Firm” (Coase, 1937), Ronald Coase observed that market prices often govern the relationships between firms, known as transactions. Ronald Coase noted that if transactions are not governed by the price system then an organisational structure must exist. The transaction cost approach was developed by Ronald Coase to identify what are the costs of providing for some transaction through the market rather than having it provided from within the firm (Klos, 2000). Some Transaction Costs types are: searching costs, negotiation costs, and monitoring or policing costs.

In further developing transaction cost economics, Williamson (1979) and Williamson (1995) has studied the organization of transactions and “governance structures” that occur whenever or wherever a good or service is transferred from a provider to a user. As one transaction occurs when a good or service is transferred, a stage of activity is terminating and another is beginning (Williamson,1979). Transaction Costs economics focuses on the transactions between the stages of activity where the firm is one type of organisational structure. Transaction cost economics can be seen as the mapping of forms of organisations into transactions. The existence of low Transaction Costs in global trade has been a leading element in globalization.

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