Evaluation of the relationship between the government and contractors in the field of financial resources of mining projects using the Nash bargaining method

Articles in Press

Document Type : Article

Authors

1 M.Sc. degree, Department of Mining Engineering, Faculty of Mining Engineering, Amirkabir University of Technology, Tehran, Iran

2 Associate Professor, Department of Mining Engineering, Faculty of Mining Engineering, Amirkabir University of Technology, Tehran, Iran

10.24200/j65.2024.62729.2366

Abstract

The mining industry plays an important role in the global economy by providing essential materials for various sectors. This has caused the concentration of the private sector to invest in mines to increase at an increasing rate in recent years. One of the most appropriate ways to participate in mining projects is to create mining contracting companies. However, government-contractor relationships in this industry can be complex and challenging, especially when there are limited financial resources. The relationship between the government and the contractor in this field is complex and highly dependent on mutual trust, cooperation and effective communication. Nash bargaining is a framework that aims to help parties negotiate to achieve a mutually beneficial outcome, even when they have conflicting interests. This method is one of the applied branches of game theory, and by using a mathematical approach, it can be used to analyze decision-making processes in situations where the results of individual decisions are affected by the decisions of other actors. Limited financial resources can exacerbate the challenges associated with these relationships and require strategic decision-making by both parties to achieve optimal results. Therefore, the objectives of this article are: (1) modeling the relationship between the government and the contractor in the mining industry using game theory and (2) evaluating the feasibility of using Nash bargaining as a method to resolve conflicts and achieve optimal results in the field Limited financial resources. By analyzing the achievements of the coalition actors, it is concluded that the public sector has a greater share than the private sector, which makes the bargaining power of the public sector greater than the private sector. One of the reasons is the high amount of government investment compared to the existing contractors in the mine. According to the values of the cooperative game, the players can jointly (cooperate in the project) achieve an amount of 1,053,287 billion Rials.

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Sharif Journal of Industrial Engineering & Management

Articles in Press, Accepted Manuscript
Available Online from 19 March 2025

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