Saturday, May 21, 2011

Spatial Price Equilibrium and Food Webs -- Supply Chains in Nature

I continue to be fascinated by networks in nature and have been conducting research at the interfaces of economics, ecology, and operations research.

Specifically, I became intrigued by the underlying economics of predator-prey relationships in complex food webs, which are nature's supply chains.

This research has led to the paper, "Spatial Price Equilibrium and Food Webs: The Economics of Predator-Prey Networks," in which we establish that the governing equilibrium conditions underlying predator-prey interactions with multiple species correspond to the classical spatial price equilibrium conditions dating to the work of the Nobel Laureate in Economic Sciences, Paul Samuelson!

To be able to establish the equivalence between systems in ecology and in economics, as we have done, suggests an inherent commonality among entirely distinct network systems and demonstrates that interactions in ecology and biology can be interpreted economically with price functions and transportation / transaction cost functions. Another fascinating aspect of ecological networks and food webs is that nodes correspond to different species but the flows are common and correspond to biomass flows. So, such networks are single commodity ones!

Our research included the development of a dynamic model of predator-prey interactions using projected dynamical systems theory, a theory and methodology which we developed, and which is now being used in evolutionary game theory by, among others, Bill Sandholm. I just purchased his book and am enjoying reading it. Economists (and others) are fascinated by evolutionary game theory, which has origins in biology, notably, in the work of Maynard Smith. I am delighted that our work has relevance here, as well.

Our paper is to appear in the Proceedings of the 2011 IEEE Conference on Supernetworks and System Management. This conference takes place in Shanghai next week.