Cooperation in Group-Buying Auctions
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TL;DR
It is shown why the group-buying auction with cooperation (GBAC) weakly dominates the fixed-price mechanism (FPM) for the seller, and insights into how the seller can set the price curve effectively are offered.
Abstract
Cooperation among bidders in traditional auctions is generally forbidden because it is harmful to the interests of sellers. However, in a new type of online auction, the group-buying auction (GBA), cooperation results in higher bidding, leading to market expansion that benefits both buyers and sellers. We will show why the group-buying auction with cooperation (GBAC) weakly dominates the fixed-price mechanism (FPM) for the seller. Through a modeling analysis, we also offer insights into how the seller can set the price curve effectively, and offer an information sharing mechanism to facilitate bidding ring formation, as a means to maximize the value of this market mechanism.