Design of an Aggregated Marketplace Under Congestion Effects: Asymptotic Analysis and Equilibrium Characterization

  • Ying-Ju ChenEmail author
  • Costis Maglaras
  • Gustavo Vulcano
Part of the Springer Series in Supply Chain Management book series (SSSCM, volume 6)


We study an aggregated marketplace where potential buyers arrive and submit requests-for-quotes (RFQs). There are n independent suppliers modeled as MGI∕1 queues that compete for these requests. Each supplier submits a bid that comprises of a fixed price and a dynamic target leadtime, and the cheapest supplier wins the order as long as the quote meets the buyer’s willingness to pay. We characterize the asymptotic performance of this system as the demand and the supplier capacities grow large, and subsequently extract insights about the equilibrium behavior of the suppliers. We show that supplier competition results in a mixed-strategy equilibrium phenomenon that is significantly different from the centralized solution. In order to overcome the efficiency loss, we propose a compensation-while-idling mechanism that coordinates the system: each supplier gets monetary compensation from other suppliers during his idle periods. This mechanism alters suppliers’ objectives and implements the centralized solution at their own will.


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Copyright information

© Springer Nature Switzerland AG 2019

Authors and Affiliations

  • Ying-Ju Chen
    • 1
    Email author
  • Costis Maglaras
    • 2
  • Gustavo Vulcano
    • 3
  1. 1.School of Business and Management & School of EngineeringThe Hong Kong University of Science and TechnologyKowloonHong Kong
  2. 2.Columbia Business SchoolNew YorkUSA
  3. 3.School of BusinessUniversidad Torcuato di TellaBuenos AiresArgentina

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