An Efficient Double Auction Mechanism for On-Demand Transport Services in Cloud-Based Mobile Commerce

Abstract

Current cloud-based solutions of mobile commerce (m-commerce) for on-demand transport services, such as Uber and Didi Dache, uses a take-it-or-leave-it market mechanism, in which passengers and drivers have no option but to accept or reject given market prices determined by transport companies. Such a market mechanism does not consider the actual needs of passengers and drivers, e.g., high-urgency situations of passengers and different operating cost of vehicles, which are valuable for determining a reasonable market value of a trip. In this paper, we introduce a double auction mechanism for on-demand transport services, which allows multiple passengers and drivers to submit their bids simultaneously. In a double auction, with bids from both passengers and drivers, the marketplace can fairly determine a reasonable price based on the current supply and demand of the market. The proposed approach, which extends the McAfee's mechanism, ensures that honesty is a dominant strategy for bidders with winning preferences. It is different from existing market mechanisms for transport services as it allows users to specify their own prices based on the actual cost of transport services as well as their urgency situations.