Abstract
Despite the variety of existing theoretical models for buyers' coalition in the current e-commerce literature, no existing coalition scheme explicitly takes into consideration issues related to the leadership attributes of the coalition. By adopting a design science research methodology and utilizing theoretical groundings of the Social Networking and Game theory, the current article provides algorithmic design of a buyer coalition scheme with explicit focus given to the 'betweenness', 'centrality', and 'closeness' attributes of the coalition leader. Detailed steps for forming the proposed coalition are provided along with related algorithmic designs and explanations for each step. The execution of the proposed algorithmic design and its effectiveness compared to the situation where no leadership attributes is explicitly considered, are demonstrated by using a scenario and associated simulation programs. Results from the simulation programs confirm that the proposed model provides additional discounts for the buyers regardless the number of buyers within the coalition, and with no additional costs to the seller. It is also expected that sellers will benefit from the proposed model as a result of reduced transaction costs associated with the proposed scheme.
Highlights
A buyer coalition is a group of buyers who join to negotiate with sellers for purchasing identical items at a larger discount [7]
Buyers will benefit from purchasing the items in large bundles/lots through buyer coalitions if the price of the lot is less than the standard retail price
By adopting a design science research methodology the present study proposes a new buyer coalition scheme called Buyer Coalition Scheme with the Connection of the Coalition Leader Scheme (BCC scheme)
Summary
A buyer coalition is a group of buyers who join to negotiate with sellers for purchasing identical items at a larger discount [7]. The leader will attract more members to the coalition due to his/her ‘closeness’, ‘betweenness’, and ‘centrality’ attributes; the latter concepts have been borrowed from the Social Network theory [8] and this is the major single contribution of our paper. This means that the proposed scheme can be integrated with other existing schemes that consider the ‘relationship’ attributes. By adopting a design science research methodology the present study proposes a new buyer coalition scheme called Buyer Coalition Scheme with the Connection of the Coalition Leader Scheme (BCC scheme).
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