HARVESTTECH AGRICULTURE COOPERATIVES: A GAME-THEORETIC APPROACH

Abstract

Agricultural industries are facing increasing pressure to optimize efficiency and reduce costs in a competitive and resource-constrained global market. As firms seek innovative ways to enhance productivity, cooperative strategies have emerged as a promising solution to address these challenges. This study applies cooperative game theory to agricultural crop processing, enabling coalitions of firms to share resources, technologies, and processing capacities, thereby optimizing costs and ensuring equitable profit distribution. We introduce a new class of totally balanced games, which model the strategic interactions among companies processing agricultural products. The objective is to identify profit allocations that fairly compensate firms contributing to cost reduction and surplus processing for others. To achieve this, we propose three compensation mechanisms, ensuring fair compensation for contributions such as cost reduction and surplus processing. Additionally, we introduce a new allocation procedure, the HarvestTech Reward allocation (HTR), which integrates the aforementioned mechanisms to achieve core-stable profit distributions. Finally, we present a simulated case study on apple farming that illustrates the application of the model, demonstrating its ability to reduce costs, prevent surplus losses, and encourage long-term collaboration among firms.