A Research Review on Market Mechanism Design
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Market design is a kind of design using mechanism as its research object.By designing the micro-mechanism of market,the result of market resource allocation can better meet the internal regulations and basic requirements of economic and social development.Market designers must have wide view like an engineer,and by using multi-tools like design theory,experimental economics and computer tools,they can think and grasp market details and the game process between market participants and market principles.The authors analyze market inefficiency and market failure problems from several aspects,and propose some feasible solutions.Keywords:
Market mechanism
Mechanism Design
Nonmarket forces
Market Analysis
Market research
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The power market does not have the conditions for a completely competitive market,and the short run marginal price is not suitable for its development.The influence of the market participants' behavior should be fully considered for the evaluation of a new pricing method,otherwise,the well-conceived can not always get expected achievements.The basic method for evaluating the market's characteristics is the game theory,and for the complicated power markets the practical evaluation tool is game simulation with intelligence agent model.Through discussions on power market practice and analysis of theories on pricing,the importance of the above-mentioned concept is proved.
Power market
Market mechanism
Price mechanism
Perfect competition
Market Analysis
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The modeling of market structures is a complex task that must recognize the social and cultural setting of those markets. This paper introduces a market simulation that can be used in a variety of contexts to examine market structures and even test proposed structures. The simulation can be adapted to a wide variety of situations ranging from simple barter to realistic supply or demand driven economies and can be used to develop organizational skills such as communications and marketing techniques.
Barter
Market Analysis
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Market maker provides counterparty for buyers and sellers of financial instruments in transaction settlement. Market makers quote the bid price and the ask price at the same time. This price setting process is called market making. This thesis covers theoretical and practical basis for implementation of autonomous market making algorithm for a promising cryptocurrency market called Ripple. We summarize market making theory, how Ripple cryptocurrency protocol works and how price formation process (market microstructure) takes place. We choose and describe predictive and non-predictive market making models. Main challenges are the setting of bid and ask price, adverse selection problem, maintenance of currency inventory balance. We collect data needed for the simulation and we provide trading results for the selected models. We conclude that predictive market making model of Das is more successful than non-predictive model due to the ability to predict the true market value. We suggest possible improvements and guidance for further development.
Counterparty
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The electricity market, due to its complex under-lying physical constraints, suffers from market manipulation. Most existing markets employ the double auction to organize the markets: the independent system operator collects the bidding information from both the supply sides and solves the Walrasian equilibrium to conduct dispatch. Market manipulation arises when market players strategically bid their information. Hence to contain the manipulation, one promising solution is to design the double auction mechanism to induce truthful bidding. In this work, we customize four double auction mechanisms (Walrasian equilibrium Mechanism, VCG mechanism, MUDA (Lottery) mechanism, and MUDA (VCG) mechanism) for the electricity market. After proposing key metrics to evaluate the performance of various mechanisms, we conduct extensive numerical studies based on the real market data for a thorough comparison between the four mechanisms and identify the unique features for each mechanism. This could serve as the theoretical guidance for the double auction mechanism design for the electricity market.
Double auction
Mechanism Design
Market mechanism
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This thesis investigates the problem of market mechanism design for supply chain management and e-marketplace development. Firstly, we consider how to design a market mechanism design for capacity allocation. We examine the game-theoretic properties of allocation mechanisms, such as efficiency, profit maximisation, and truth-telling, with respect to quantity competition and price competition in a related market of the supply chain. We find that a few typical allocation mechanisms are sensitive to supply chain settings. We design a new allocation mechanism for supply chains with quantity competition and prove that it is a truth-telling mechanism. Secondly, we investigate the design of market mechanisms for online markets. We introduce an approach to the modelling of online markets as supply chains, in which a coordination mechanism is applied to the market between the online market owner and the sellers. We design a new online market contact based on the idea of profit-sharing and prove that it achieves coordination with advertisement. Finally, we introduce an experimental approach to the design, analysis and implementation of market mechanisms based on double auction. We define a formal market model that specifies the market policies in a double auction market. Based on this model, we introduce a set of criteria for the evaluation of a market mechanism. We design and implement a set of market policies and test them with different experimental settings. The results of experiments provide us a better understanding of the interrelationship among the market policies and also show that an experimental approach can greatly improve the efficiency and effectiveness of market mechanism design.
Mechanism Design
Market mechanism
Double auction
Two-sided market
Price mechanism
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Economics of complex system has been proposed to clarify market mechanism with reality. We formulate market simulation model as discrete resource allocation problem based on the economics of complex systems. Three types of heterogeneous agents are defined in the complex virtual market. Complex network concept is introduced into the market simulation so as to realise social consumer network for information exchange. The applicability of the market simulation into producers' strategic decision makings is discussed.
Complex system
Information exchange
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Value (mathematics)
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Computer automation has the potential, just starting to be realized, of transforming the design and operation of markets, and the behaviors of agents trading in them. We discuss the possibilities for automating markets, presenting a broad conceptual framework covering resource allocation as well as enabling marketplace services such as search and transaction execution. One of the most intriguing opportunities is provided by markets implementing computationally sophisticated negotiation mechanisms, for example combinatorial auctions. An important theme that emerges from the literature is the centrality of design decisions about matching the domain of goods over which a mechanism operates to the domain over which agents have preferences. When the match is imperfect (as is almost inevitable), the market game induced by the mechanism is analytically intractable, and the literature provides an incomplete characterization of rational bidding policies. A review of the literature suggests that much of our existing knowledge comes from computational simulations, including controlled studies of abstract market designs (e.g., simultaneous ascending auctions), and research tournaments comparing agent strategies in a variety of market scenarios. An empirical game-theoretic methodology combines the advantages of simulation, agent-based modeling, and statistical and game-theoretic analysis.
Combinatorial auction
Mechanism Design
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The introduction of market principles is a promising approach for dealing with the complex issues that arise in Grid resource management. A key aim is to align the resource consumption and provisioning patterns of Grid participants through proper incentive mechanisms. An important research question in this regard is the choice of a market organization. A number of such organizations have been proposed to support an economically inspired form of Grid resource management. This paper presents a comparative, quantitative, analysis of the single-unit Vickrey auctions and commodity market organizations with regards to price stability, fairness, and communicative and computational requirements. Our analysis based on simulated market scenarios shows that both market organizations lead to similar outcomes but that a commodity market organization leads to more stable market behavior at the cost of higher communicative requirements.
Commodity market
Provisioning
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This paper suggests a multiagent system (MAS) approach for market simulation. This is achieved through analysis, modeling, implementation and simulation of artificial markets populated by software agents that represent economic self interested agents. Software agents are the constructs of a complex system, an artificial market that model a real existing market or an outline of a market design. The interest in simulating a market is multiple: exploiting existing market rules, searching for market design flaws and loopholes, and supporting decision making during a market mechanism design process. The main aim of the suggested approach is to analyze the behavior that emerges from the interaction of self interested agents acting in an artificial market.
Market Analysis
Software agent
Market mechanism
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