Mechanism design for coalition formation and cost sharing in group-buying markets [An article from: Electronic Commerce Research and Applications]

This digital document is a journal article from Electronic Commerce Research and Applications, published by Elsevier in 2004. The article is delivered in HTML format and is available in your Amazon.com Media Library immediately after purchase. You can view it with any web browser.

Description:
We study the mechanism design problem of coalition formation and cost sharing in a group-buying electronic marketplace, where buyers can form coalitions to take advantage of volume based discounts. The desirable mechanism properties include stability (in the core), and incentive compatibility with good efficiency. We show the impossibility to simultaneously satisfy efficiency, budget balance and individual rationality at a Bayesian-Nash equilibrium, and propose a mechanism in the core of the game. We then present and evaluate a group of reasonable mechanisms. Empirical results show positive correlation between stability and incentive compatibility (which is in turn related to efficiency).