Increasing Realized Revenue via Profit Redistribution: A Variant of Online Dutch Auction

  • Marin Markov
  • Penka Markova
  • Mukesh Mohania
  • Yahiko Kambayashi
Conference paper
Part of the Lecture Notes in Computer Science book series (LNCS, volume 2738)


In this paper we propose a new variant of a Dutch auction with the aim of maximizing the revenue realized from the auctioneer by shifting to him some of the profits from the highest bidders, while at the same time preserving the allocative efficiency achieved in the Dutch auctions. We then develop and analyze a model for this variant that corresponds to a multi-unit, progressively ascending, lowest winning bid open auction. The proposed model achieves the objective through the use of coupons, which may be introduced during the auction and drive up the lowest winning price and respectively the total revenue. This variant of a Dutch auction guarantees that the sum of the face value of all used coupons will be less than (or equal to) the increase in the revenue caused by their use. As a result the realized revenue will be higher than the revenue received in a typical Dutch auction with the same settings.


Customer Satisfaction Total Revenue Allocative Efficiency High Bidder Uniform Price 
These keywords were added by machine and not by the authors. This process is experimental and the keywords may be updated as the learning algorithm improves.


Unable to display preview. Download preview PDF.

Unable to display preview. Download preview PDF.


  1. 1.
  2. 2.
    Ausubel, L., Schwartz, J.: The Ascending Auction Paradox. Working Paper, University of Maryland (1999)Google Scholar
  3. 3.
    Bansal, V., Garg, R.: Efficiency and Price Discovery in Multi-item Auctions. ACM SigEcom Exchanges 2(1), 26–32 (2001)CrossRefGoogle Scholar
  4. 4.
    Bapna, R., Goes, P., Gupta, A.: A theoretical and empirical investigation of multi-item online auctions. Information Technology and Management 1, 1–23 (2000)CrossRefGoogle Scholar
  5. 5.
    Bapna, R., Goes, P., Gupta, A.: Comparative analysis of multi-item online auctions: evidence from the laboratory. Decision Support Systems 32, 135–153 (2001)CrossRefGoogle Scholar
  6. 6.
    Kopalle, P.K., Mela, C.F., Marsh, L.: The dynamic effect of discounting of auction under single and multi-unit demand. Marketing Science 18(3) (1999)Google Scholar
  7. 7.
    Kothari, R., Mohania, M., Kambayashi, Y.: Increasing Realized Revenue in a Web Based Dutch Auction. In: Bauknecht, K., Tjoa, A.M., Quirchmayr, G. (eds.) EC-Web 2002. LNCS, vol. 2455, pp. 7–16. Springer, Heidelberg (2002)CrossRefGoogle Scholar
  8. 8.
    Manelli, A.M., Sefton, M., Wilner, B.S.: Multi-Unit Auctions: A Comparison of Static and Dynamic Mechanisms. Working Paper, University of Nottingham (September 2000)Google Scholar
  9. 9.
    Milgrom, P.: Auctions and bidding: A primer. Journal of Economic Perspectives 3, 3–22 (1989)Google Scholar
  10. 10.
    Vickrey, W.: Counter-speculation, auctions, and competitive sealed tenders. Journal of Finance 41, 8–37 (1961)CrossRefGoogle Scholar
  11. 11.
    Demange, G., Gale, D., Sotomayor, M.: Multi-item Auctions. Journal of Political Economy 94, 863–872 (1986)CrossRefGoogle Scholar

Copyright information

© Springer-Verlag Berlin Heidelberg 2003

Authors and Affiliations

  • Marin Markov
    • 1
  • Penka Markova
    • 2
  • Mukesh Mohania
    • 3
  • Yahiko Kambayashi
    • 4
  1. 1.Computer Science DepartmentPurdue UniversityWest LafayetteUSA
  2. 2.Departments of Electrical Engineering and Computer ScienceStanford UniversityStanfordUSA
  3. 3.IBM – India Research Laboratory Block I – IIT Hauz KhasNew DelhiIndia
  4. 4.Department of Social InformaticsKyoto UniversityKyotoJapan

Personalised recommendations