Efficient auction mechanisms for distributed transportation service procurement

This paper aims to propose efficient auctions for the distributed transportation procurement problem (DTPP), which is generally the problem of matching various demand and supply over a transportation network. We first construct a one-sided Vickrey-Clarke-Groves (O-VCG) combinatorial auction for the DTPP where carriers are allowed to bid on bundles of lanes. The O-VCG auction minimizes the total transportation cost (i.e., allocative efficiency) and induces truthful bidding from carriers (i.e., incentive compatibility). To simplify the execution of auction, we next propose a primal-dual Vickrey (PDV) auction based on insights from the known Ausubel auctions and the primal-dual algorithm. The PDV auction is actually a descending auction, which seems simple enough to be understood by any layperson. The PDV auction realizes VCG payments and truthful bidding under some conditions. This implies that the winner determination problem of O-VCG auction is solved by the proposed primal-dual algorithm under some conditions. Finally, carriers may reveal less private information in the PDV auction due to the dynamic procedures.