Exogenous coalition formation in the e-marketplace based on geographical proximity

McBurney, Peter and Michalak, Tomasz and Tyrowicz, Joanna and Wooldridge, Michael (2008): Exogenous coalition formation in the e-marketplace based on geographical proximity.

Abstract

This paper considers a model for exogenous coalition formation in e-marketplaces. Using the informational advantage e-retailer creates coalitions of customers based on geographical proximity. Most of the literature regards this process as endogenous: a coalition leader bundles eventual purchases together in order to obtain a better bargaining position. In contrast - and in response to what is being observed in business practice - we analyse a situation in which an existing e-retailer exogenously forms customers' coalitions. Results of this study are highly encouraging. Namely, we demonstrate that even under highly imperfect warehouse management schemes leading to contagion eects, suggested combined delivery service may oer signifficant efficiency gains as well as opportunities for Pareto-improvement.

• Item Type: MPRA Paper
• Language: English
• Keywords: Coalition formation, e-commerce, multi-agent systems, consumer satisfaction, demand planning, warehouse management.
• Subjects: D - Microeconomics > D1 - Household Behavior and Family Economics > D12 - Consumer Economics: Empirical Analysis; C - Mathematical and Quantitative Methods > C1 - Econometric and Statistical Methods and Methodology: General > C15 - Statistical Simulation Methods: General

References

Li, C., Chawala, S., Rajan, U. and Sycara, K.: 2003, Mechanisms for Coalition Formation and Cost Sharing in an Electronic Marketplace. Report CMU-RI-TR-03-10.

Li, C. and Sycara, K.: 2002, Algorithm for Combinatorial Coalition Formation and Payo Division in an Electronic Marketplace.