Concurrent Auctions Across The Supply Chain

TL;DR

This paper proposes protocols for concurrent double auctions across supply chain markets, enabling independent operation while maintaining overall efficiency through information exchange, and compares different auction variants for incentive compatibility and revenue.

Contribution

It introduces a novel framework for coordinating multiple supply chain markets via information exchange protocols in double auctions, ensuring efficient global behavior.

Findings

Protocols enable independent market operation with coordinated outcomes

Different auction variants are compared for efficiency and revenue

The approach supports flexible auction types within the supply chain context

Abstract

With the recent technological feasibility of electronic commerce over the Internet, much attention has been given to the design of electronic markets for various types of electronically-tradable goods. Such markets, however, will normally need to function in some relationship with markets for other related goods, usually those downstream or upstream in the supply chain. Thus, for example, an electronic market for rubber tires for trucks will likely need to be strongly influenced by the rubber market as well as by the truck market. In this paper we design protocols for exchange of information between a sequence of markets along a single supply chain. These protocols allow each of these markets to function separately, while the information exchanged ensures efficient global behavior across the supply chain. Each market that forms a link in the supply chain operates as a double auction, where the bids on one side of the double auction come from bidders in the corresponding segment of the industry, and the bids on the other side are synthetically generated by the protocol to express the combined information from all other links in the chain. The double auctions in each of the markets can be of several types, and we study several variants of incentive compatible double auctions, comparing them in terms of their efficiency and of the market revenue.