Allocation and Pricing of Online Group-Buying Based on the Continuous Price Function

Abstract

Group-Buying has becoming a popular commodity trading mode in current business modes. However, the existing unified price of group-buying often determine the price by setting the ladder function according to the final quantities. This method not only ignores the contributions of participants to group-buying, but also cannot overcome the impact of buyers' false reports on group buying mechanism. In this paper, a pricing method of online group-buying based on continuous price function is proposed. We adopt an algorithm called VCG4GB, buyers' payments are the sum of commodities price and the extra amount by purchase quantity. The mechanism motivates buyers to report truthful preference through the compensatory payment. We prove that the mechanism has economic attributes such as incentive compatibility through theoretical proof and simulation experiments.