Agent Competition Double Auction Mechanism

We propose an agent competition double auction (AC-DA) mechanism in this paper. The AC-DA mechanism is strategy-proof, individual-rational, and weakly budget-balanced for the complementarity-substitutability environment. The AC-DA mechanism also achieves asymptotic efficiency when applied to the exchange environment with pair-related costs (e.g., the transportation costs) between buyers and sellers. We also show that if the system welfare function is quasi-linear, the efficiency and optimality of the mechanism are aligned, that is, the most efficient mechanism will also maximize the profit of the auctioneer. Furthermore, using an example, we illustrate that both the system welfare and each individual agent's payoff can be improved if more competition is introduced into both sides of the system.