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A Decentralized, Smart Market Solution to a Class of Back-Haul Transportation Problems: Concept and Experimental Test Beds

Author

Listed:
  • Paul J. Brewer

    (Hong Kong University of Science and Technology, Clear Water Bay, Hong Kong SAR, China California Institute of Technology, Pasadena, California 91125)

  • Charles R. Plott

    (Hong Kong University of Science and Technology, Clear Water Bay, Hong Kong SAR, China California Institute of Technology, Pasadena, California 91125)

Abstract

Back-haul problems occur in many areas of transportation. One-way rental often takes equipment, such as cases and containers, from an area of high demand to an area of low demand. The problem is to return the equipment to the location of need, a problem typically viewed as an administrative and scheduling problem. We developed a decentralized approach in which a specially designed market organizes competition and information to minimize the cost of back-hauls without the direct intervention of administrative negotiations or command-and-control types of scheduling. We employed laboratory experimental methods to test the concept, examine its performance against theoretical benchmarks, and explore its limitations.

Suggested Citation

  • Paul J. Brewer & Charles R. Plott, 2002. "A Decentralized, Smart Market Solution to a Class of Back-Haul Transportation Problems: Concept and Experimental Test Beds," Interfaces, INFORMS, vol. 32(5), pages 13-36, October.
    • Handle: RePEc:inm:orinte:v:32:y:2002:i:5:p:13-36
    DOI: 10.1287/inte.32.5.13.27
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    References listed on IDEAS

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    1. Jeffrey S. Banks & John O. Ledyard & David P. Porter, 1989. "Allocating Uncertain and Unresponsive Resources: An Experimental Approach," RAND Journal of Economics, The RAND Corporation, vol. 20(1), pages 1-25, Spring.
    2. Brewer, Paul J. & Plott, Charles R., 1996. "A binary conflict ascending price (BICAP) mechanism for the decentralized allocation of the right to use railroad tracks," International Journal of Industrial Organization, Elsevier, vol. 14(6), pages 857-886, October.
    3. Nilsson, Jan-Eric, 1999. "Allocation of track capacity: Experimental evidence on the use of priority auctioning in the railway industry," International Journal of Industrial Organization, Elsevier, vol. 17(8), pages 1139-1162, November.
    4. Plott, Charles R, 1994. "Market Architectures, Institutional Landscapes and Testbed Experiments," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 4(1), pages 3-10, January.
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    6. S.J. Rassenti & V.L. Smith & R.L. Bulfin, 1982. "A Combinatorial Auction Mechanism for Airport Time Slot Allocation," Bell Journal of Economics, The RAND Corporation, vol. 13(2), pages 402-417, Autumn.
    7. McCabe, Kevin A. & Rassenti, Stephen J. & Smith, Vernon L., 1989. "Designing `smart' computer-assisted markets : An experimental auction for gas networks," European Journal of Political Economy, Elsevier, vol. 5(2-3), pages 259-283.
    8. Olson, Mark & Porter, David, 1994. "An Experimental Examination into the Design of Decentralized Methods to Solve the Assignment Problem with and without Money," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 4(1), pages 11-40, January.
    9. Plott, Charles R. & Porter, David P., 1996. "Market architectures and institutional testbedding: An experiment with space station pricing policies," Journal of Economic Behavior & Organization, Elsevier, vol. 31(2), pages 237-272, November.
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    Cited by:

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