Auctions for structured procurement

This paper considers a general setting for structured procurement and the problem a buyer faces in designing a procurement mechanism to maximize profit. This brings together two agendas in algorithmic mechanism design, frugality in procurement mechanisms (e.g., for paths and spanning trees) and profit maximization in auctions (e.g., for digital goods). In the standard approach to frugality in procurement, a buyer attempts to purchase a set of elements which satisfy a feasibility requirement as cheaply as possible. For profit maximization in auctions, a seller wishes to sell some number of goods for as much as possible. We unify these objectives by endowing the buyer with a decreasing marginal benefit per feasible set purchased and then considering the problem of designing a mechanism to buy a number of sets which maximize the buyer's profit, i.e., the difference between their benefit for the sets and the cost of procurement. For the case where the feasible sets are bases of a mat...

• Type: Conference
• Year: 2008
• Where: SODA
• Authors: Matthew Cary, Abraham D. Flaxman, Jason D. Hartline, Anna R. Karlin
• Keywords: Algorithms, Mechanism Design, Procurement Mechanisms, Profit Maximization, SODA 2008