Reverse Auction System for Transparent Market Pricing
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Solution Overview
Problem
Existing auction systems, both physical and electronic, often result in buyers paying prices higher than the market value due to competitive bidding, lacking a mechanism for sellers to compete based on real cost prices and attracting a large number of buyers and sellers, while transparency and homogeneity of products or services are not fully utilized.
Innovation Solution
A system and method for auctions over a communication network where sellers compete to accept purchase proposals from buyers, with bids processed in homogeneous forms, allowing sellers to take lots based on attractive offers, and incorporating complementary services like financing and insurance, ensuring transparency and fair pricing through a bonus factor.
Engineering Contradictions & Design Principles
Engineering Contradiction Analysis
1Productivity
If competitive bidding is used among buyers to acquire products or services, then the acquisition speed and transaction efficiency are improved, but the purchase price increases above market value
Solution Approach 1:
The patent inverts the traditional auction model by making sellers (rather than buyers) the competing parties. Instead of buyers bidding against each other to drive prices up, sellers compete to win buyer contracts by offering lower prices. This reversal transforms the price-pressure dynamic from upward to downward, allowing transactions to occur at or near market value while maintaining high efficiency.
Solution Approach 2:
The patent changes the key parameter of competition from price-bidding-up (traditional auctions) to price-bidding-down (reverse auctions). By altering the direction of price movement and making the lowest bid win instead of the highest, the system achieves both fast transaction closure and price reduction to market levels.
2Adaptability or versatility
If individual buyer-seller negotiations are used, then transaction flexibility is improved, but market transparency and price fairness deteriorate
Solution Approach 1:
The patent merges multiple individual negotiations into a single collective reverse auction process. Multiple sellers compete simultaneously against each other for the same buyer contracts, combining what would otherwise be separate bilateral negotiations. This creates a transparent environment where all sellers see the same competition conditions and all buyers see the same bid comparisons, ensuring price fairness while maintaining flexibility.
Solution Approach 2:
The patent introduces an electronic auction platform as an intermediary that facilitates transparent matching between buyers and sellers. The platform publicly displays all bids, competition rules, and transaction conditions, eliminating information asymmetry while allowing flexible negotiation parameters to be set by the buyer before the reverse auction begins.
3Adaptability or versatility
If sellers present products with differentiated specifications and prices, then product diversity and seller individuality are improved, but market homogeneity and comparison ease deteriorate
Solution Approach 1:
The patent segments the market into standardized contract categories (e.g., specific quantities, delivery terms, specifications) that remain constant across all sellers. Within each standardized category, sellers can compete on price and minor variations, maintaining product diversity while ensuring that the core comparison parameters are homogeneous and easily comparable across all bids.
Data Source
AI summary
A method for performing actions of an auction of a product or service through a communication network including sending to a plurality of sellers product or service specifications with an upset price wherein the plurality of sellers present a plurality of offers in homogenous manner for auction; receiving the plurality of offers; storing the plurality of offers in a database of communication network; receiving, from a plurality of buyers, purchase proposals for the product or service, the proposals being determined for each of the offers of the plurality of sellers; storing purchase proposals in the database; processing the purchase proposals and determining a plurality of lots, each of the lots of the plurality of lots being constituted by the plurality of purchase proposals received for each of the offers of the plurality of offers; and monitoring the moment when one of the sellers of the plurality of sellers buys a respective lot of the plurality of lots thereby defining the opportune moment, in the course of the auction, the price range of his interest to sell the product or service to the plurality of buyers who has given the plurality of purchase proposals in the respective lot bought.