Method, apparatus, and system for bidding in rounds

Abstract

A method of conducting an auction in at least two rounds is disclosed. The method includes conducting the first auction round, applying a rule to an occurrence in the first auction round, and conducting the second auction round in accordance with the application of the rule to the occurrence in the first auction round. A system for conducting an auction in at least two rounds is also disclosed. The system includes a sponsor processor, a first bidder processor communicating with the sponsor processor, and a second bidder processor communicating with the sponsor processor. In the system, the sponsor processor contains instructions which, when executed by the processor, cause the processor to conduct the first auction round, apply a rule to an occurrence in the first auction round, and conduct a second auction round in accordance with the applied rule.

Description

CROSS-REFERENCE TO RELATED APPLICATIONS[0001]The present application is a continuation-in-part of U.S. patent application Ser. No. 09 / 252,790, filed Feb. 19, 1999, currently pending and assigned to the assignee of the present invention.BACKGROUND OF THE INVENTION[0002]1. Field of the Invention[0003]The disclosed invention relates generally to conducting multiple auction rounds for one or more lots of goods or services, and in particular, to basing a rule for an auction round on an occurrence in a previous auction round, wherein a condition for defining the rule is defined prior to commencing the previous auction.[0004]2. Description of the Background[0005]Procurement of goods and services have traditionally involved high transaction costs. The cost of finding and qualifying potential bidders has been particularly high. The advent of electronic commerce has introduced new methods of procurement that lower some of the transaction costs associated with procurement. Electronic procureme...

AI Technical Summary

Benefits of technology

"The present invention provides a method, system, and apparatus for conducting auctions in multiple rounds. The method involves applying a rule to an occurrence in the first auction round and conducting a second auction round in accordance with the applied rule. The system includes a sponsor processor, bidder processors, and a bidding device. The invention allows for a more efficient and effective auction process, with improved outcomes for both bidders and suppliers. It also allows for a more transparent and engaging auction experience for bidders."

Problems solved by technology

Procurement of goods and services have traditionally involved high transaction costs.

The cost of finding and qualifying potential bidders has been particularly high.

Although the first electronic catalogs reduced the information search cost associated with procurement, customers were disadvantageously “locked in” to one supplier at each electronic catalog.

Customers were thus unable to compare a number of competing products in a single catalog.

Many electronic catalogs, however, were biased toward the supplier offering the electronic catalog, and it was thought that procurement costs could be lowered further through an unbiased market.

Therefore, third-party “market makers” developed markets for many standard products and services, which were intended to be unbiased markets.

Catalog and buyer-bidding auction models, however, have limitations and do not work well in every situation.

For example, it is difficult for a supplier to publish set prices in a catalog for custom products.

Likewise, it is difficult to specify a custom product and identify buyers who might use that custom product for a buyer-bidding auction.

Additionally, there may be only one buyer interested in a custom product, such that a buyer-bidding auction may not be applicable in all cases.

Thus, few suppliers can typically provide custom goods and services and standard product and pricing information is typically not available for buyers of custom industrial products.

The search tended to be slow and random, and typically relied heavily on personal relationships.

The costs associated with locating vendors, comparing prices, and negotiating a deal were therefore large.

The cost of switching suppliers was also large, such that an incumbent supplier's quoted price was most likely not the lowest price he could offer because the incumbent supplier knew the buyer would face switching costs to use another supplier.

As an additional consequence, new suppliers had a difficult time entering the market because of those high switching costs.

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