Fresh Agricultural Auction Reserve Price Dynamic Pricing Strategy Research

Auction, as an ancient mechanism of finding price and resource allocation, has been two thousand years of history, and has its unique charm. With the development of auction practice and auction theory, the Europe and America market which have more developed productive forces, discovered that the auction trading mode suit the commodity characteristics of fresh agricultural products at first. However, it is found in the transaction process that the price of fresh agricultural products is uncertain because of big volume and difficulty to keep. There are so many factors affecting the transaction price that big price differentiation exists. High level of volatility is an adverse effect to suppliers, buyers and auction house. Hence, it is essential to take measures to contain the price volatility in time to ensure smooth operation of auction market. Take Kunming International Flower Auction Market (KIFA) for example, we found that good mechanism is only one of effective ways of ensuring successful auction. Other common approaches are dynamically setting reservation price and ensuring a fair auction and so on.The study on reservation price has emerged in early auction theory in which more ideal assumptions are given, such as an unchanged uniform distribution of buyers'valuations, zero commission rate, risk-neutral participants and so on. In comparison, there may be no uniform distribution in real auctions. In addition, the commission and the change in suppliers'valuation in auction transactions can make the theoretical optimal strategy failure. Thus, the optimal reservation price of previous study is considered to lack of practical value. Taking the real environment of Chinese market, this paper determines the factors of reservation price by summarizing relevant theoretical literatures and analyzing the existing transaction data. To verify the reasonableness of assumption about buyers' valuations in traditional theories, we analyze the survey data and find that the distribution of buyers'valuations is uncertain, not uniform.When the distribution of buyers'valuation is uncertain, the optimal reservation price will change. In chapter 4, we use the method of non-parameter estimation to estimate the distribution of buyers'valuation through the existing transaction price data. We are pleased that the estimates and the actual results agree better. After determining the method of estimate the distribution of buyers' valuation, the optimal reservation price is obtained by constructing a model which induces commission index, supplied quantity and prices. Then the impacts of factors on the optimal reservation price are discussed and draw a series of valuable conclusions.