Does carrier collaboration require combinatorial auctions?

Abstract

Carrier collaboration has emerged as an important way to increase the efficiency of the logistics sector and has attracted significant interest as a research topic in the past decades. Most frameworks for carrier collaboration rely on combinatorial auctions to allocate bundles of transportation requests to carriers. In this paper, we analyze whether combinatorial auctions are indeed needed for this purpose, or additive pricing schemes, in which requests are priced and allocated separately, could also lead to efficient allocations. Using additive pricing would considerably simplify the entire process. Starting from concepts of economic equilibria, we argue that theory does not rule out this possibility even for complex valuations. We then analyze how often additive pricing schemes can support an efficient allocation of requests by simulating capacity-constrained Traveling Salesperson Problems. Our results indicate that, depending on the geographical configuration of requests, this is indeed possible in a large fraction of problems. Thus we argue that the current focus of carrier collaboration research on bundle generation and combinatorial auctions needs to be reconsidered.