Comparative Analysis of Sequential and Combinatorial Auctions Based on Petri Nets

Abstract

An auction is a crucial resource allocation mechanism for a supply chain and includes the purchasing price at the winner's bid value, eligible suppliers in winning bidder sets, and business payment terms. A multi-object auction usually involves two types of mechanisms: sequential and combinatorial auctions (CAs). A literature review reveals that the research on CAs still has some treasures waiting to be discovered. Using the framework of Petri nets, this paper employs timed and colored tokens representing every bidder's bidding data and applies transition nodes to execute bidding rules such as combinatorial discriminate analysis, bidder's bid decision-making, and the auctioneer's winner decision-making. Based on the contribution of workflows in Petri net theory, we present a case-based CA Petri net model and a sequential auction Petri net model. We compare the supply chain coordination performance of these two types of auctions and reach the conclusion under given assumptions. This paper is an attempt to apply Petri net theory to auctions and provides valuable insights for organizers to establish scientific and efficient bidding processes.

Keywords

• Auction
• combinatorial auction
• sequential auction
• substitution
• supply chain
• Petri net