Serial Cost Allocation in the Cooperative Purchasing Organization

Under the seller＇s quantity discount, buyers self-organize or rely on a third party to aggregate their purchasing quantities to obtain lower prices. Because of the unequal member contributions in the cooperative purchasing organization, the buyers＇ strategy is different, the members often fluctuate,...

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Bibliographic Details
Published inShanghai jiao tong da xue xue bao Vol. 18; no. 6; pp. 749 - 755
Main Author 张涛 顾天舟 宋昕帅 顾锋
Format Journal Article
LanguageEnglish
Published Berlin/Heidelberg Springer Berlin Heidelberg 01.12.2013
Subjects
Architecture
Computer Science
Electrical Engineering
Engineering
Life Sciences
Materials Science
quantity discounts
cooperative game
F 062
serial cost allocation
cooperative purchase
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Summary:Under the seller＇s quantity discount, buyers self-organize or rely on a third party to aggregate their purchasing quantities to obtain lower prices. Because of the unequal member contributions in the cooperative purchasing organization, the buyers＇ strategy is different, the members often fluctuate, and the organizations do not sustain themselves. An effective mechanism is necessary to improve the performance of purchasing groups. We study the various forms of cost allocation mechanism in practice. Different allocation rules may have influence on the buyers＇ behavior （i.e., purchasing quantities, whether joining the organization or not）. We analyze the serial cost allocation and equilibrium purchasing quantity based on a Nash equilibrium, and the results show that each buyer is worse off when not participating in the existence buying organization of the other buyers. We further find that the serial mechanism just confirms the most efficient Nash equilibrium： reasonable cost allocation rule is necessary for the subjects to identify their optimal strategy.
Bibliography:31-1943/U
ZHANG Tao, GU Tian-zhou, Song Xin-shuai, GU Feng（1. Antai College of Economics and Management, Shanghai Jiaotong University, Shanghai 200052, China; 2. China College of Economic Administration of China University of Petroleum （East China）, Qingdao 266580, Shandong, China; 3. School of Mathematical Sciences, Fudan University, Shanghai 200433, China）
serial cost allocation, quantity discounts, cooperative purchase, cooperative game
Under the seller＇s quantity discount, buyers self-organize or rely on a third party to aggregate their purchasing quantities to obtain lower prices. Because of the unequal member contributions in the cooperative purchasing organization, the buyers＇ strategy is different, the members often fluctuate, and the organizations do not sustain themselves. An effective mechanism is necessary to improve the performance of purchasing groups. We study the various forms of cost allocation mechanism in practice. Different allocation rules may have influence on the buyers＇ behavior （i.e., purchasing quantities, whether joining the organization or not）. We analyze the serial cost allocation and equilibrium purchasing quantity based on a Nash equilibrium, and the results show that each buyer is worse off when not participating in the existence buying organization of the other buyers. We further find that the serial mechanism just confirms the most efficient Nash equilibrium： reasonable cost allocation rule is necessary for the subjects to identify their optimal strategy.
ISSN:1007-1172
1995-8188
DOI:10.1007/s12204-013-1461-7