Developing an Online Market Mechanism for Trading Perishable Agricultural Commodities

Kazuo Miyashita

No 212470, 2015 Conference, August 9-14, 2015, Milan, Italy from International Association of Agricultural Economists

Abstract: One-sided auctions are used for trading perishable agricultural commodities because their production cost is already "sunk." Moreover, the promptness and simplicity of onesided auctions are beneficial for trading in perishable commodities. However, sellers cannot participate in the price-making process in these auctions. A standard double auction market collects bids from both sides of traders and matches them to find the most efficient allocation, assuming that the value of unsold items remains unchanged. Nevertheless, in the market for perishable commodities, sellers suffer a loss when they fail to sell their commodities, because their salvage values are lost when the commodities perish without being sold. To solve this problem, we investigate the design of an online double auction for perishable commodities, where bids arrive dynamically with their time limits. Our market mechanism aims at improving the profitability of traders by reducing trade failures in the face of uncertainty of incoming/departing bids.

Keywords: Agricultural and Food Policy; Agricultural Finance; Research and Development/Tech Change/Emerging Technologies (search for similar items in EconPapers)
Pages: 30
Date: 2015
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Persistent link: https://EconPapers.repec.org/RePEc:ags:iaae15:212470

DOI: 10.22004/ag.econ.212470

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