International Conference on Electronic Commerce and Web Technologies

EC-Web 2002: E-Commerce and Web Technologies pp 27-36

A New Approach to the Design of Electronic Exchanges

  • S. Kameshwaran
  • Y. Narahari
Conference paper

DOI: 10.1007/3-540-45705-4_4

Volume 2455 of the book series Lecture Notes in Computer Science (LNCS)
Cite this paper as:
Kameshwaran S., Narahari Y. (2002) A New Approach to the Design of Electronic Exchanges. In: Bauknecht K., Tjoa A.M., Quirchmayr G. (eds) E-Commerce and Web Technologies. EC-Web 2002. Lecture Notes in Computer Science, vol 2455. Springer, Berlin, Heidelberg

Abstract

Electronic Exchanges are double-sided marketplaces that allows multiple buyers to trade with multiple sellers, with aggregation of demand and supply across the bids to maximize the revenue in the market. In this paper, we propose a new design approach for an one-shot exchange that collects bids from buyers and sellers and clears the market at the end of the bidding period. The main principle of the approach is to decouple the allocation from pricing. It is well known that it is impossible for an exchange with voluntary participation to be e.cient and budget-balanced. Budget-balance is a mandatory requirement for an exchange to operate in profit. Our approach is to allocate the trade to maximize the reported values of the agents. The pricing is posed as pay-off determination problem that distributes the total payo. fairly to all agents with budget-balance imposed as a constraint. We devise an arbitration scheme by axiomatic approach to solve the payoff determination problem using the added-value concept of game theory.

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Copyright information

© Springer-Verlag Berlin Heidelberg 2002

Authors and Affiliations

  • S. Kameshwaran
    • 1
  • Y. Narahari
    • 1
  1. 1.eEnterprises Laboratory Department of CSAIndian Institute of ScienceBangaloreIndia