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12-23 Invited Talk: Prof. Jian Chen, School of Economics and Management, Tsinghua University

  • Release date:2011-12-20 08:43:00

Title: Study on the Group-buying auction
Speaker: Professor Jian Chen, School of Economics and Management, Tsinghua University
Time: December 23, 2011, (Friday) 15:30
Venue: Main Conference Room 241
Speaker Profile:
  Tsinghua University Lenovo Chair Professor of Management Science and Engineering, doctoral tutor, Director of Tsinghua University Department of Management Science and Engineering. Main research areas: supply chain management, e-commerce, business intelligence and decision analysis, system optimization and forecasting technology. Teach courses including dynamic system analysis and control, decision theory, operations management, supply chain management.
  Professor Jian Chen has published over one hundred and seventy papers in the "Annals of Operations Research", "IEEE Transaction on System, man and Cybernetics-Part A: systems and human", "IIE Transactions", "Information Science", "International Journal of Production Economics "," Naval Research Logistics "," Operations Research Letters "," Production and Operations Management "," System Engineering Theory and Practice "," Management Science "and other international and domestic academic papers; chaired nearly twenty National Natural Science Foundation, the Ministry of Education, 863 and other ministries projects, and nearly 20 local government / corporate commissioned projects.
Introduction:
  With the development of electronic commerce, online auction plays an important role in the electronic market. The group-buying auction (GBA) is a new kind of dynamic pricing mechanism on the Internet. It makes the bidders as a group through Internet to get the volume discounts, i.e., the more bidders bid, the lower the price of the object being auctioned becomes. In this talk, we first analyze the group-buying auction under some assumptions and build an incomplete information dynamic game model to illustrate the bidders’ bidding process. It proves that for the bidders there exists a weakly dominant strategy S, i.e., no matter when a bidder arrives at the auction and what the bidding history is, the highest permitted bid price that is no greater than his value to the object is always his optimal bid price, but may not be the unique one. Then, we analyze the seller's pricing strategy with the GBA. Based on the bidders' optimal strategy, the sellers' optimal price curve of the GBA in the uniform unit cost case and in some supply chain coordination contracts are explored. We find that the best discount rate is zero, which implies the optimal GBA is equivalent to the optimal fixed pricing mechanism (FPM). Furthermore, we compare the GBA with the FPM in two special cases, the economies of scale and risk-seeking seller, and find that in both cases the GBA outperforms the FPM. The collusion of bidders in traditional auctions is generally forbidden because it is harmful to the interests of sellers. However, we find that collusion in the GBA results in higher bidding, leading to market expansion that benefits both bidders and sellers. Finally, we extend our study to B2B commerce, i.e., consider a supply chain with one supplier and several retailers in their respective independent market, where the supplier offers a new pricing mechanism based on the GBA. An equilibrium is presented