Abstract:

Recent years， more and more firms adopt reverse auctions to procure products and service because reverse auctions are efficient and can help firms reduce their purchase costs. However， the suppliers’ collusion can make the reverse auction to be inefficient and hurt the buyer. Moreover， the suppliers’ collusion is ubiquitous in reality. Then designing collusion-proof reverse auction mechanism is a very important problem for the buyers to adopt them. In this paper， the designing problem of a collusion-proof reverse auction procurement mechanism， which can prevent suppliers from’ collusion， is considered. A buyer wants to buy multi-unit divisible homogeneous goods and some potential suppliers have one-unit supply capacity. As a benchmark， the standard reverse auction model （under which the suppliers bid independently） with multi-unit divisible homogeneous goods is studied， and the suppliers’ equilibrium bidding strategies and the single-price auction implementation are analyzed. Then， the reverse auction procurement model， where the suppliers will collude biding， is studied. And the suppliers’ equilibrium bidding strategy and the buyer’s expectation profit are obtained. Furthermore， a collusion-proof reverse auction procurement mechanism （two-stage auction-negotiation mechanism） is designed. The mechanism is showed to be individually rational， incentive-compatible and to meet quantity constraint. Moreover， the suppliers cannot gain more from collusion under this mechanism， so that they have no incentive to collude biding. Numerical experiments are conducted to show the effectiveness of the collusion-proof mechanism. It can provide guidance for companies’ procurement and reduce the procurement costs.

Key words: reverse auction, procurement mechanism design, collusion-proof, negotiation