The model of making a price match based on automatic negotiated price for electronic commerce

Abstract

The paper proposes a new sealed bargaining mechanism based on the electronic business negotiation model focusing on the opaqueness of information on demand and supply. With the supply and demand function to analyse the underlying rules of behaviours during the course of the price change, the paper proves a series of intersecting chord theorems concerning concave supply and demand function, upon which a transaction mechanism for price negotiating purposes meaning that manufacturers and distributors submit the supply and demand according to gradual node recursive algorithm after the first offer made at the e-commerce platform. Therefore, it proves the principle that negotiated price is converged to the equilibrium price of supply and demand. It is concluded that through simulating the process of negotiated pricing under the concave demand and supply functions, it is possible to settle on the equilibrium price of market after a few pricing negotiations, ultimately fulfilling the goal of optimal pricing in opacity market.