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The First Use of a Combined-Value Auction for Transportation Services

Author

Listed:
  • John O. Ledyard

    () (Division of the Humanities and Social Sciences, California Institute of Technology, Mailcode 228-77, Pasadena, California 91125)

  • Mark Olson

    () (Interdisciplinary Center for Economic Science, George Mason University, MSN 1B2, 4400 University Drive, Fairfax, Virginia 22030-4444)

  • David Porter

    () (Interdisciplinary Center for Economic Science, George Mason University, MSN 1B2, 4400 University Drive, Fairfax, Virginia 22030-4444)

  • Joseph A. Swanson

    () (Joseph Swanson and Company, 312 South Main Street, Racine, Wisconsin 53403–1029)

  • David P. Torma

    () (Joseph Swanson and Company, 312 South Main Street, Racine, Wisconsin 53403–1029)

Abstract

Combined-value auctions (CVAs) allow participants to make an offer of a single amount for a collection of items. These auctions provide value to both buyers and sellers of goods or services in a number of environments, but they have rarely been implemented, perhaps because of lack of knowledge and experience. Sears Logistics Services (SLS) is the first procurer of trucking services to use a CVA to reduce its costs. In 1993, it saved 13 percent over past procurement practices. Experimental economics played a crucial role in the development, sale, and use of the CVA.

Suggested Citation

  • John O. Ledyard & Mark Olson & David Porter & Joseph A. Swanson & David P. Torma, 2002. "The First Use of a Combined-Value Auction for Transportation Services," Interfaces, INFORMS, vol. 32(5), pages 4-12, October.
  • Handle: RePEc:inm:orinte:v:32:y:2002:i:5:p:4-12
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    File URL: http://dx.doi.org/10.1287/inte.32.5.4.30
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