Macroeconomics Commons^™

Exogenous Coalition Formation In The E-Marketplace Based On Geographical Proximity, Tomasz Michalak, Joanna Tyrowicz, Peter Mcburney, Michael Wooldridge

Joanna Tyrowicz

This paper considers a model for exogenous coalition formation in e-marketplaces. Using its informational advantage, an e-retailer creates coalitions of customers based on geographical proximity. Most of the literature regards this process as endogenous: a coalition leader among the buyers bundles eventual purchases together in order to obtain a better bargaining position. In contrast – and in response to what is typically observed in business practice – we analyse a situation in which an existing e-retailer exogenously forms customers’ coalitions. Results of this study are highly encouraging. Namely, we demonstrate that even under highly imperfect warehouse management schemes leading to …