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Setting Fees in Competing Double Auction Marketplaces: An Equilibrium Analysis

Shi, Bing, Gerding, Enrico H., Vytelingum, Perukrishnen and Jennings, Nicholas R. (2010) Setting Fees in Competing Double Auction Marketplaces: An Equilibrium Analysis At 12th International Workshop on Agent-Mediated Electronic Commerce (AMEC 2010), Canada. , pp. 85-98.

Record type: Conference or Workshop Item (Paper)


In this paper, we analyse competing double auction marketplaces that vie for traders and need to set appropriate fees to make a profit. Specifically, we show how competing marketplaces should set their fees by analysing the equilibrium behaviour of two competing marketplaces. In doing so, we focus on two different types of market fees: registration fees charged to traders when they enter the marketplace, and profit fees charged to traders when they make transactions. In more detail, given the market fees, we first derive equations to calculate the marketplaces' expected profits. Then we analyse the equilibrium charging behaviour of marketplaces in two different cases: where competing marketplaces can only charge the same type of fees and where competing marketplaces can charge different types of fees. This analysis provides insights which can be used to guide the charging behaviour of competing marketplaces. We also analyse whether two marketplaces can co-exist in equilibrium. We find that, when both marketplaces are limited to charging the same type of fees, traders will eventually converge to one marketplace. However, when different types of fees are allowed, traders may converge to different marketplaces (i.e. multiple marketplaces can co-exist).

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Published date: 10 May 2010
Additional Information: Event Dates: 10 May
Venue - Dates: 12th International Workshop on Agent-Mediated Electronic Commerce (AMEC 2010), Canada, 2010-05-10
Organisations: Agents, Interactions & Complexity


Local EPrints ID: 268589
PURE UUID: 9d7f22c6-f886-4702-8e2b-a441a8881a4b

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Date deposited: 11 Mar 2010 16:33
Last modified: 18 Jul 2017 06:52

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Author: Bing Shi
Author: Enrico H. Gerding
Author: Perukrishnen Vytelingum
Author: Nicholas R. Jennings

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