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Supply Chain Coordination Mechanism Design: Consensus Planning Protocol Meets Vickrey-Clarke-Groves Mechanism

Author

Listed:
  • Dirk Bergemann
  • Garrett van Ryzin
  • Jiaxuan Li

Abstract

This paper introduces the theoretical framework for combining Vickrey-Clarke-Groves (VCG) mechanisms with the Consensus Planning Protocol (CPP) to enable truthful and efficient collaboration between a retailer and vendors to lower joint Cost to Serve. We demonstrate how this integration preserves both dominant-strategy incentive compatibility and efficiency in high-dimensional environments. We further introduce an activity fee design to improve its revenue property for the retailer while maintaining the mechanism's desirable properties. This CPP-VCG framework serves as the theoretical foundation for designing collaborative mechanisms to coordinates distributed, agent-based optimization between retailers and suppliers.

Suggested Citation

  • Dirk Bergemann & Garrett van Ryzin & Jiaxuan Li, 2026. "Supply Chain Coordination Mechanism Design: Consensus Planning Protocol Meets Vickrey-Clarke-Groves Mechanism," Papers 2605.16695, arXiv.org.
    • Handle: RePEc:arx:papers:2605.16695
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    References listed on IDEAS

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    1. Dirk Bergemann & Juuso Välimäki, 2019. "Dynamic Mechanism Design: An Introduction," Journal of Economic Literature, American Economic Association, vol. 57(2), pages 235-274, June.
    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. Dirk Bergemann & Juuso V‰lim‰ki, 2010. "The Dynamic Pivot Mechanism," Econometrica, Econometric Society, vol. 78(2), pages 771-789, March.
    4. Mohammad Akbarpour & Shengwu Li, 2020. "Credible Auctions: A Trilemma," Econometrica, Econometric Society, vol. 88(2), pages 425-467, March.
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