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

Dirk Bergemann, Garrett van Ryzin and Jiaxuan Li

Papers from arXiv.org

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.

Date: 2026-05
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