Journal of Management Information Systems

Volume 23 Number 1 2006 pp. 161-182

Market Segmentation Within Consolidated E-Markets: A Generalized Combinatorial Auction Approach

Jones, Joni L, Easley, Robert F, and Koehler, Gary J

ABSTRACT: We analyze an e-market design that allows multiple market segments to be served simultaneously with a single generalized combinatorial auction. The mechanism uses rule-based bids designed to accommodate various kinds of bidders, such as those more sensitive to price or those more restricted in their requirements. We demonstrate experimentally--using agent-based simulation of the actual market for television advertising slots--that the rule-based approach effectively handles the wide range of market segments, while maintaining buyer and seller surplus and efficiently allocating goods.

Key words and phrases: combinatorial auction, electronic markets, market segmentation