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Auctions as a Dynamic Pricing Mechanism for E-Services

  • Juong-Sik Lee
  • Boleslaw K. Szymanski
Part of the Integrated Series in Information Systems book series (ISIS, volume 16)

Abstract

Increasing role of services in developed economies around the world combined with ubiquitous presence of computer networks and information technologies result in rapid growth of e-services. Markets for e-services often require flexible pricing to be efficient and therefore frequently use auctions to satisfy this requirement. However, auctions in e-service markets are recurring since typically e-services are offered repeatedly, each time for a specific time interval. Additionally, all e-services offered in an auction round must be sold to avoid resource waste. Finally, enough bidders must be willing to participate in future auction rounds to prevent a collapse of market prices. Because of these requirements, previously designed auctions cannot work efficiently in e-service markets. In this chapter, we introduce and evaluate a novel auction, called Optimal Recurring Auction (ORA), for e-services markets. We present also simulation results that show that, unlike the traditional auctions, ORA stabilizes the market prices and maximizes the auctioneer’s revenue in e-service markets.

Key words

e-commerce e-services dynamic pricing recurrent auction bidder drop 

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Copyright information

© Springer Science+Business Media, LLC 2007

Authors and Affiliations

  • Juong-Sik Lee
    • 1
  • Boleslaw K. Szymanski
    • 1
  1. 1.Optimaret Inc. and Department of Computer ScienceRensselaer Polytechnic InstituteTroyUSA

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