A two-phase combinatorial double auction and negotiation mechanism for socialized joint reserve mode in emergency preparedness

Abstract

Natural disasters seriously threaten the safety of human life and property. In order to provide sufficient emergency supplies instantly after disasters, it is necessary to reserve them in advance. The socialized joint reserve mode (SJRM) for emergency supplies has increasingly become a meaningful way to improve emergency preparedness capacity. Aiming to establish a market-oriented trading method of reserve services and allocate them efficiently, this research designs a two-phase combinatorial double auction and negotiation mechanism. The specific objective of this mechanism is to determine the transaction relationship, quantity, and price. In the first phase, the government, humanitarian relief organizations (HROs), enterprises and supermarkets constitute reserve service transaction's demand and supply sides. Their benchmark bidding strategy is given, and winners are determined by maximizing social surplus. In the second phase, the winners hold negotiations to discuss the supply priority of emergency materials and determine the trade quantity and price of the future. The negotiation contains two situations: oversupply and short supply. The decision-making results of the buyer and the seller are given respectively. A numerical example and sensitivity analysis are proposed to show the process and results of the auction and negotiation. The research shows that the mechanism designed in this paper can achieve the cooperation of multiple buyers and sellers in multiple periods. It proves that applying auction theory to emergency management practice has good feasibility and applicability.