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Coordination of purchasing and bidding activities across posted offer and auction markets

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Abstract

In both consumer purchasing and industrial procurement, combinatorial interdependencies among the items to be purchased are commonplace. E-commerce compounds the problem by providing more opportunities for switching suppliers at low costs, but also potentially eases the problem by enabling automated market decision-making systems, commonly referred to as trading agents, to make purchasing decisions in an integrated manner across markets. We are investigating a new approach to deal with the combinatorial interdependency challenges for online markets. This approach relies on existing commercial online market institutions such as posted-offer markets and various online auctions that sell single items. It uses trading agents to coordinate a buyer’s purchasing and bidding activities across multiple online markets simultaneously to achieve the best overall procurement effectiveness. This paper presents two sets of models related to this approach. The first set of models formalizes optimal purchasing decisions across posted-offer markets with fixed transaction costs. The second set of models is concerned with the coordination of bidding activities across multiple online auctions.

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Correspondence to Daniel D. Zeng.

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Research reported in this paper was partially supported by a Proposition 301 Electronic Commerce Grant, University of Arizona Eller College of Management. The first author is also affiliated with The Key Lab of Complex Systems and Intelligence Science, Chinese Academy of Sciences (CAS), Beijing, and was supported in part by a grant for open research projects (ORP-0303) from CAS. Earlier versions of this paper have appeared in the Proceedings of the Hawai’i International Conference on System Sciences (HICSS-37) and the Proceedings of the 13th Annual Workshop on Information Technology and Systems (WITS ’03).

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Zeng, D.D., Cox, J.C. & Dror, M. Coordination of purchasing and bidding activities across posted offer and auction markets. ISeB 5, 25–46 (2007). https://doi.org/10.1007/s10257-006-0037-6

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