Several Mechanism Design Issues Under Competitive Environment

Mechanism design theory is the most rapidly developed subfield of computational economics in the recent thirty years.It has a very wide application from product pricing to online advertising auctions,from election voting to making national policies.With the help of mechanism design theory,we can control the outcomes of these occasions to meet expected social objectives.Research on mechanism design theory has focused on the scenarios that have simple inter-participant interactions.However,with the progress of science,technology and social life,mechanism designers are facing an increasingly complex mechanism design scenarios,e.g.,the scenario with fiercely competing participants and mechanism designers.To this end,this paper explores the mechanism design issues in the competitive environment.The mechanism design problems in the competitive environment can be divided into the mechanism design problems where the mechanism participants compete with each other and the problems where multiple mechanism designers facing the same pool of participants compete with each other.For example,as advanced network technologies enable convenient transmissions and collections of information,many group-buying websites have set up to aggregate demands from different buyers and then group-buy products with lower price.In this scenario,buyers can compete to form group-buying coalitions for their own sake given the product discount mechanism.In this paper,two practical problems are explored with respect to the mechanism design problems where the mechanism participants compete with each other.Specifically,this paper first explores the pricing and sharing mechanism of the telecom infrastructure joint venture as an example of the mechanism design problem where the mechanism participants fall in direct competition.The telecom infrastructure joint venture is co-invested by telecom operators competing at the end user market.While these operators hold shares of the joint venture,the joint venture also rents its infrastructure services to each operator and the operators no longer maintain any private infrastructures.The original purpose to establish this infrastructure joint venture was to reduce the repetitive construction of infrastructures.This paper reveals the inefficiency of the market profit caused by the competition of operators and shows how to control the competition and optimize the market profit by rationally setting the pricing and sharing mechanism of the joint venture.In a more general sense,this paper shows how multi-party competition can ensure a win-win situation through certain resource-sharing mechanism.This paper then explores the group-buying strategy and the discount mechanism in cloud computing market as an example of the mechanism design problem where the mechanism participants can form coalitions in competition.For a group of users with heterogeneous demands on cloud computing resources,they can obtain a higher discount by forming a group-buying coalition,thereby reducing purchase costs.Although group-buying can benefit cloud computing users in principle,but the effective group-buying strategy that all parties are satisfied remains to be studied.Based on the concept of stability in coalitional game theory,this paper proposes a new stability concept,the contractually group stability,and applies it in the groupbuying problem in cloud market.Moreover,an effective algorithm is designed to calculate this stable solution for group-buying in cloud.Furthermore,we conduct numerical experiments to show that the cloud service provider can adjust its discount mechanism to improve the utilization of cloud resources and increase its own utility.In a more general sense,the stability analysis of participants is the foundation of the mechanism design where the mechanism participants can form coalitions to improve their utility.The stability concept and the algorithm proposed in this paper reinforce the foundation.On the other hand,the mechanism designers may also compete with each other.For instance,the rise of a variety of online advertising platforms leads the competition among online advertising auction designers.This paper reviews the latest literature on mechanism design problem with competing mechanism designers,and discusses the future research directions.