Advanced Search
MyIDEAS: Login

A Negotiation-Credit-Auction mechanism for procuring customized products

Contents:

Author Info

  • Chen, Songlin
  • Tseng, Mitchell M.
Registered author(s):

    Abstract

    Customization promises higher value creation by matching customers' individual specific needs with manufacturers' capabilities. However, difficulties in terms of information asymmetry, information stickiness, and conflicting incentives prevent customers from effectively tapping into the value of customization in procurement. This research conceptualizes procurement of customized products as a transaction problem with an embedded design problem. A Negotiation-Credit-Auction mechanism is developed to separate design and transaction into two stages and employ negotiation and auction, respectively. Bidding credits are introduced in an intermediate stage as an instrument for incentive adjustment. This hybrid mechanism proves to be socially efficient and provides necessary flexibility as well as incentives for innovation in customization.

    Download Info

    If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
    File URL: http://www.sciencedirect.com/science/article/B6VF8-508CCSG-2/2/d12ed4f490a459cafa60d6918d73639f
    Download Restriction: Full text for ScienceDirect subscribers only

    As the access to this document is restricted, you may want to look for a different version under "Related research" (further below) or search for a different version of it.

    Bibliographic Info

    Article provided by Elsevier in its journal International Journal of Production Economics.

    Volume (Year): 127 (2010)
    Issue (Month): 1 (September)
    Pages: 203-210

    as in new window
    Handle: RePEc:eee:proeco:v:127:y:2010:i:1:p:203-210

    Contact details of provider:
    Web page: http://www.elsevier.com/locate/ijpe

    Related research

    Keywords: Customization Procurement Negotiation Auction Bidding credits;

    References

    References listed on IDEAS
    Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
    as in new window
    1. Jason Shachat & J. Todd Swarthout, 2003. "Procurement Auctions for Differentiated Goods," Experimental 0310004, EconWPA.
    2. Myerson, Roger B. & Satterthwaite, Mark A., 1983. "Efficient mechanisms for bilateral trading," Journal of Economic Theory, Elsevier, vol. 29(2), pages 265-281, April.
    3. Hur, Daesik & Hartley, Janet L. & Mabert, Vincent A., 2006. "Implementing reverse e-auctions: A learning process," Business Horizons, Elsevier, vol. 49(1), pages 21-29.
    4. Asker, John & Cantillon, Estelle, 2004. "Properties of Scoring Auctions," CEPR Discussion Papers 4734, C.E.P.R. Discussion Papers.
    5. Patrick Bajari & Robert McMillan & Steven Tadelis, . "Auctions versus Negotiations in Procurement: An Empirical Analysis," Working Papers 02007, Stanford University, Department of Economics.
    6. Bulow, Jeremy & Klemperer, Paul, 1996. "Auctions versus Negotiations," American Economic Review, American Economic Association, vol. 86(1), pages 180-94, March.
    7. Bichler, Martin & Kalagnanam, Jayant, 2005. "Configurable offers and winner determination in multi-attribute auctions," European Journal of Operational Research, Elsevier, vol. 160(2), pages 380-394, January.
    8. Salvador, F. & Forza, C., 2004. "Configuring products to address the customization-responsiveness squeeze: A survey of management issues and opportunities," International Journal of Production Economics, Elsevier, vol. 91(3), pages 273-291, October.
    9. Panayiotou, Nikolaos A. & Gayialis, Sotiris P. & Tatsiopoulos, I.P.Ilias P., 2004. "An e-procurement system for governmental purchasing," International Journal of Production Economics, Elsevier, vol. 90(1), pages 79-102, July.
    10. McAfee, R Preston & McMillan, John, 1987. "Auctions and Bidding," Journal of Economic Literature, American Economic Association, vol. 25(2), pages 699-738, June.
    11. Carter, Craig R. & Kaufmann, Lutz & Beall, Stewart & Carter, Phillip L. & Hendrick, Thomas E. & Petersen, Kenneth J., 2004. "Reverse auctions--grounded theory from the buyer and supplier perspective," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 40(3), pages 229-254, May.
    12. Da Silveira, Giovani & Borenstein, Denis & Fogliatto, Flavio S., 2001. "Mass customization: Literature review and research directions," International Journal of Production Economics, Elsevier, vol. 72(1), pages 1-13, June.
    13. Asher Wolinsky, 2005. "Procurement via Sequential Search," Journal of Political Economy, University of Chicago Press, vol. 113(4), pages 785-810, August.
    14. Gunasekaran, Angappa & Ngai, Eric W.T., 2008. "Adoption of e-procurement in Hong Kong: An empirical research," International Journal of Production Economics, Elsevier, vol. 113(1), pages 159-175, May.
    15. Jianmin Jia & James S. Dyer, 1996. "A Standard Measure of Risk and Risk-Value Models," Management Science, INFORMS, vol. 42(12), pages 1691-1705, December.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as in new window

    Cited by:
    1. Bagchi, Aniruddha & Aliyas Paul, Jomon & Maloni, Michael, 2011. "Improving bid efficiency for humanitarian food aid procurement," International Journal of Production Economics, Elsevier, vol. 134(1), pages 238-245, November.

    Lists

    This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

    Statistics

    Access and download statistics

    Corrections

    When requesting a correction, please mention this item's handle: RePEc:eee:proeco:v:127:y:2010:i:1:p:203-210. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Zhang, Lei).

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If references are entirely missing, you can add them using this form.

    If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.