Agent-based Simulation of Alliance Formation and its Stability Analysis: Application to Aviation Industry

The purpose of this paper is two-fold: The first is to develop an agent-based simulation model for simulating alliance formation processes of the business world, and to analyze stability of alliance structures generated by it. The second purpose is to apply the simulation model to the civil aviation industry for validating it as well as for obtaining insightful and unique findings about the industry. As the results, we find the alliances in the industry are basically formed for network connectivity rather than management complementarities. Wealso suggest possibility that American Airlines and British Airways may may get separated.