Design for Optimized Multi-Lateral Multi-Commodity Markets

In this paper, we propose a design for an an economically efficient, optimized, centralized, multi-lateral, periodic commodity market that addresses explicitly three issues: (i) substantial transportation costs between sellers and buyers; (ii) non homogeneous, in quality and nature, commodities; (iii) complementary commodities that have to be traded simultaneously. The model allows sellers to offer their commodities in lots and buyers to explicitly quantify the differences in quality of the goods produced by each individual seller. The model does not presume that products must be shipped through a market hub. We also propose a multi-round auction that enables the implementation of the direct optimized market and approximates the behaviour of the "ideal" direct optimized mechanism. The process allows buyers and sellers to modify their initial bids, including the technological constraints. The proposed market designs are particularly relevant for industries related to natural resources. We present the models and algorithms required to implement the optimized market mechanisms, describe the operations of the multi-round auction, and discuss applications and perspectives. Nous présentons un concept de marché optimisé, centralisé, multilatéral et périodique pour l'acquisition de produits qui traite explicitement les trois aspects suivants: (i) des coûts de transport importants des vendeurs vers les acheteurs; (ii) des produits non homogènes en valeur et qualité; des complémentarités entre les divers produits qui doivent donc être négociés simultanément. Le modèle permet aux vendeurs d'offrir leurs produits groupés en lots et aux acheteurs de quantifier explicitement leur évaluation des lots mis sur le marché par chaque vendeur. Le modèle ne suppose pas que les produits doivent être expédiés par un centre avant d'être livrés. Nous proposons également un mécanisme de tâtonnement à rondes multiples qui approxime le comportement du marché direct optimisé et qui permet de mettre ce dernier en oeuvre. Le processus de tâtonnement permet aux vendeurs et aux acheteurs de modifier leurs mises initiales, incluant les contraintes technologiques. Les concepts proposés sont particulièrement adaptés aux industries reliées aux matières premières. Nous présentons les modèles et algorithmes requis à la mise en oeuvre du marché multi-latéral optimisé, nous décrivons le fonctionnement du processus de tâtonnement, et nous discutons les applications et perspectives reliées à ces mécanismes de marché.Market design, optimized multi-lateral multi-commodity markets, multi-round auctions, Design de marché, marché multi-latéraux optimisés, processus de tâtonnement

A MIP framework for non-convex uniform price day-ahead electricity auctions

It is well-known that a market equilibrium with uniform prices often does not exist in non-convex day-ahead electricity auctions. We consider the case of the non-convex, uniform-price Pan-European day-ahead electricity market "PCR" (Price Coupling of Regions), with non-convexities arising from so-called complex and block orders. Extending previous results, we propose a new primal-dual framework for these auctions, which has applications in both economic analysis and algorithm design. The contribution here is threefold. First, from the algorithmic point of view, we give a non-trivial exact (i.e. not approximate) linearization of a non-convex 'minimum income condition' that must hold for complex orders arising from the Spanish market, avoiding the introduction of any auxiliary variables, and allowing us to solve market clearing instances involving most of the bidding products proposed in PCR using off-the-shelf MIP solvers. Second, from the economic analysis point of view, we give the first MILP formulations of optimization problems such as the maximization of the traded volume, or the minimization of opportunity costs of paradoxically rejected block bids. We first show on a toy example that these two objectives are distinct from maximizing welfare. We also recover directly a previously noted property of an alternative market model. Third, we provide numerical experiments on realistic large-scale instances. They illustrate the efficiency of the approach, as well as the economics trade-offs that may occur in practice

Designing smart markets

Electronic markets have been a core topic of information systems (IS) research for last three decades. We focus on a more recent phenomenon: smart markets. This phenomenon is starting to draw considerable interdisciplinary attention from the researchers in computer science, operations research, and economics communities. The objective of this commentary is to identify and outline fruitful research areas where IS researchers can provide valuable contributions. The idea of smart markets revolves around using theoretically supported computational tools to both understand the characteristics of complex trading environments and multiechelon markets and help human decision makers make real-time decisions in these complex environments. We outline the research opportunities for complex trading environments primarily from the perspective o

Combinatorial auctions for electronic business

Combinatorial auctions (CAs) have recently generated significant interest as an automated mechanism for buying and selling bundles of goods. They are proving to be extremely useful in numerous e-business applications such as e-selling, e-procurement, e-logistics, and B2B exchanges. In this article, we introduce combinatorial auctions and bring out important issues in the design of combinatorial auctions. We also highlight important contributions in current research in this area. This survey emphasizes combinatorial auctions as applied to electronic business situations

Auctions, Bidding and Exchange Design

The different auction types are outlined using a classification framework along six dimensions. The economic properties that are desired in the design of auction mechanisms and the complexities that arise in their implementation are discussed. Some of the most interesting designs from the literature are analyzed in detail to establish known results and to identify the emerging research directions.Engineering and Applied Science

Optimization in Telecommunication Networks

Network design and network synthesis have been the classical optimization problems intelecommunication for a long time. In the recent past, there have been many technologicaldevelopments such as digitization of information, optical networks, internet, and wirelessnetworks. These developments have led to a series of new optimization problems. Thismanuscript gives an overview of the developments in solving both classical and moderntelecom optimization problems.We start with a short historical overview of the technological developments. Then,the classical (still actual) network design and synthesis problems are described with anemphasis on the latest developments on modelling and solving them. Classical results suchas Menger’s disjoint paths theorem, and Ford-Fulkerson’s max-flow-min-cut theorem, butalso Gomory-Hu trees and the Okamura-Seymour cut-condition, will be related to themodels described. Finally, we describe recent optimization problems such as routing andwavelength assignment, and grooming in optical networks.operations research and management science;

Combinatorial Auction-based Mechanisms for Composite Web Service Selection

Composite service selection presents the opportunity for the rapid development of complex applications using existing web services. It refers to the problem of selecting a set of web services from a large pool of available candidates to logically compose them to achieve value-added composite services. The aim of service selection is to choose the best set of services based on the functional and non-functional (quality related) requirements of a composite service requester. The current service selection approaches mostly assume that web services are offered as single independent entities; there is no possibility for bundling. Moreover, the current research has mainly focused on solving the problem for a single composite service. There is a limited research to date on how the presence of multiple requests for composite services affects the performance of service selection approaches. Addressing these two aspects can significantly enhance the application of composite service selection approaches in the real-world. We develop new approaches for the composite web service selection problem by addressing both the bundling and multiple requests issues. In particular, we propose two mechanisms based on combinatorial auction models, where the provisioning of multiple services are auctioned simultaneously and service providers can bid to offer combinations of web services. We mapped these mechanisms to Integer Linear Programing models and conducted extensive simulations to evaluate them. The results of our experimentation show that bundling can lead to cost reductions compared to when services are offered independently. Moreover, the simultaneous consideration of a set of requests enhances the success rate of the mechanism in allocating services to requests. By considering all composite service requests at the same time, the mechanism achieves more homogenous prices which can be a determining factor for the service requester in choosing the best composite service selection mechanism to deploy