Predator–prey analysis using system dynamics : an application to the steel industry

Abstract

In this paper, we use a predator–prey model to simulate intersectoral dynamics, with the global steel sector as the prey that supplies inputs and the automotive sector as the predator that demands its inputs. A further prey, an additional upstream supply sector, namely the iron ore sector, is added to reflect the implications of scarcity and resource limitations for industrial development and economic prospects. We find that capacity constraints in the steel industry could limit the future supply of vehicles, a result exacerbated by the unsustainable use of iron ore reserves. The solution is not for marginal steel industries to close, but for steelmakers to adapt and move to less resource-demanding secondary steelmaking technology rather than focusing on primary steelmaking. The forecasting capabilities of the model are compared with the outputs from a neural-network model. Although the results are comparable over the short term (±10 years), over the long term, results diverge, showing that forecasting steel-industry dynamics is complex and that further work is required to disentangle the drivers of supply and demand. This study indicates the potential advantages of using predator–prey models in modelling the supply chain in economics.